Netflix restricts password sharing in more than 100 countries

Europe 1 with AFP / Photo credits: JONATHAN RAA / NURPHOTO / NURPHOTO VIA AFP 11:09 am, May 24, 2023, modified at 14:21 pm, May 24, 2023

Netflix announced Tuesday that users in the United States, France and a hundred other countries around the world will now have to pay extra to share their access codes to the service with people who are not members of their household, as part of its strategy to diversify its revenue. The streaming veteran has been testing this new formula for a year, and has already implemented it in Canada in particular, after a difficult 2022, marked by subscriber losses in the first half, before bouncing back in the second.

"More than 100 million households share their account, which affects our ability to invest in great movies and TV series," Netflix said in a statement in February. Prices vary by country: U.S. households will now have to pay nearly $8 more per month to allow a guest to use their account. "Your Netflix account is for you and for the people who live with you, which is your home," the platform said in an email to be sent Tuesday to all affected subscribers.

The message indicates the two possible solutions for those who already share their credentials: they can add an additional subscriber by paying the supplement, or transfer the profile of someone outside the household. The latter will have to subscribe to its own subscription but will thus keep its preferences.

Fighting "profiteers"

Netflix, which has more than 232 million subscribers, also added a cheaper subscription with advertising at the end of 2022, after years of reluctance. It now accounts for nearly 5 million monthly active users, according to the company. "It's no coincidence that Netflix is pursuing both approaches," said Ross Benes of Insider Intelligence. "People who use other people's accounts, as well as those who choose the formula with advertising, are looking to save money. For profiteers who will lose their access, the new subscription will therefore be an attractive option," the analyst said.

"And it's a win-win for the company that is struggling to grow viewership as quickly as advertisers would like." The strategy to restrict password sharing had been delayed, but testing and deployments in Latin America and more recently in Canada have been successful, according to Greg Peters, the company's co-CEO. "At first, there are cancellations. And then people who used borrowed credentials create their own accounts and add profiles, and we regain ground in terms of subscriptions and revenue," he said at an analyst conference in April.

The gamble carries risks, "if profiteers realize they can live without Netflix and cling to the Prime Video (Amazon), Disney+ or Max (HBO) accounts of their friends and families instead of subscribing to their own subscription," Benes said.

"Confusion"

In addition to these streaming services, the pioneer of the sector faces competition from social platforms and networks. In March, Insider Intelligence predicted that by 2024 U.S. adults using TikTok will spend more than 58 minutes a day on average on the app, just behind Netflix (62 minutes), and far ahead of YouTube (48.7 minutes). To maintain its prominent place on screens, Netflix relies on its successful series, especially those that are becoming cultural phenomena.

"Our job is to always have more titles that people absolutely want to see," Peters said in January. The series "The Crown", about Queen Elizabeth II, "Emily in Paris", "Stranger Things" or "Wednesday" contribute largely to the popularity of the platform. In February, Netflix had justified the end of unlimited sharing of passwords in these terms: "We have always made it easier for people living together to share a Netflix account, with different profiles and the ability to watch each their own program" on different screens, simultaneously.

"These tools have been immensely popular, but they have created confusion about when and how you can share Netflix," the company said in a statement. Tuesday's email is also a reminder that subscribers continue to be able to watch their programs when they're on the go.