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Netflix comes for that login you share (here’s when and why)

Sharing Netflix passwords with friends and family is so common that the streaming service once encouraged the trend. In 2017, Netflix tweeted: “Love shares the password.”

However, Netflix appears to have changed dramatically, with the company suggesting that the password-sharing ban could start within a year or so. And that could mean big changes for Netflix users.

About 33% of Netflix users share their passwords with other households, according to the Leichtman Research Group. If you are using someone else’s Netflix account, you may soon need to pay for Netflix in order to continue using the service. (Unhappy with Netflix’s upcoming bill? Here’s how you can stop living paycheck to paycheck.)

Below are some of the factors likely behind the upcoming Netflix password crackdown.

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1. Slowdown in membership growth

Why is the ban on password sharing just around the corner? A major reason could be the slowdown in Netflix membership growth.

In the first quarter of this year, Netflix’s membership growth fell short of the company’s earnings forecasts. The streaming platform lost 200,000 paying members and saw its shares drop nearly 40%.

In the current quarter, Netflix says it will likely lose 2 million customers from its streaming service. Netflix has already lost 700,000 users as a result of its withdrawal from Russia in March in response to that country’s invasion of Ukraine.

After the price increase in January, another 600,000 people in the United States and Canada opted out of the service.

2. Millions of views on shared accounts

According to the streaming platform, Netflix is ​​used by approximately 100 million households. Turning those viewers into paying users could be the deciding factor in the streaming platform’s survival. The company sees the ban on password sharing as a “big opportunity” to change its current direction.

Following a subscription price hike earlier this year, subscriber expansion is the next possible revenue growth option. Consequently, the video streaming company decided that the idea of ​​restricting password sharing could be a vital step in achieving its goals.

Netflix is ​​also considering creating an ad-supported service. According to Netflix CEO Reed Hastings, the streaming service platform could offer a cheaper, ad-supported membership tier, similar to what competitors like Disney’s Hulu are doing now.

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3. Increasing competition

The intense competition in the streaming business has become a major threat to Netflix. Over the past couple of years, new competitors to Netflix have included:

  • Disney+

  • Amazon

  • HBO Max

  • Peacock NBCUniversal

  • Paramount+

  • Apple TV+

Netflix said in its Q4 2021 earnings report that competition could affect its marginal growth. In a recent shareholder letter for the first quarter of 2022, the company confirmed that while competition has been strong over the past 15 years, it has intensified in recent years.

4. High cost of original content

The streaming business is not cheap. Netflix continues to invest billions of dollars annually in original content as part of a long-term strategy to protect its business from the influence of aggressive competitors.

The company’s original hits such as “Squid Game”, “Bridgerton” and “Money Heist” helped it stand out from the crowd. To stay afloat as costs rise, a streaming platform needs to generate new revenue streams and at least break even.

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What does this mean for Netflix subscribers

Netflix is ​​currently experimenting with charging for password sharing in three countries – Chile, Costa Rica and Peru.

In these countries, those who are part of the Netflix Standard and Premium plans can add two additional accounts for people in other households for an additional fee. For example, in Costa Rica, the fee is $2.99.

Netflix says it will monitor how this new option works “before making changes anywhere else in the world.”

bottom line

It looks like Netflix may soon be trying to stop password sharing, though company executives have said it could take a year before a crackdown kicks in. If and when that happens, users will have to decide whether to pay for Netflix or cancel — as if any of us need more. financial stress. Here are ways you can take a hit from Netflix and stop living paycheck to paycheck.

It’s not clear how long anyone watching a shared account will have access if the main account user refuses to pay the additional fee. So, it’s time to decide if paying for Netflix is ​​worth it. That way, you’ll be ready when the new company policy comes into effect.

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This article Netflix comes for that login you share (here’s when and why) originally appeared on FinanceBuzz.

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