If mine was one of the estimated 30 million households in Netflix’s UCAN market (covering the US and Canada) in which someone borrows someone else’s Netflix account password in order to stream content like Bridgerton Season 2 or The Adam ProjectI may be feeling a little nervous right now.
As expected, Netflix just released brutal quarterly results on Tuesday, April 19. Among other things, there was a loss of subscribers for the first time in more than a decade. And there’s a lot more to unpack in the streamer’s performance too, which also saw Netflix pull out of Russia following its invasion of Ukraine. This had the effect of decoupling around one million subscribers from the overall user base.
Long story short: Streaming Wars is increasingly turning into something akin to grueling hand-to-hand combat between major departments. And each additional benefit will be more and more valuable. That’s why Netflix also had a lot to say about password sharing in its latest quarterly letter to shareholders.
Netflix Account Password Sharing
At the very top of this letter to shareholders, in the second sentence, Netflix includes its first reference to password sharing. The streamer’s “relatively high household penetration,” it reads, “when including the large number of households sharing accounts combined with competition, creates headwinds for revenue growth” (emphasis mine).
Netflix goes on to promise shareholders that the company will work to “re-accelerate” revenue growth. How? One way is to improve the streaming service overall. The other: “Efficient monetization of multi-household sharing”.
Translation – Netflix needs money more than ever from your moochers who use other people’s Netflix accounts.
What’s the problem?
Let’s stop briefly here for a quick recap. Netflix has tiered pricing plans that allow two or four simultaneous Netflix streams. Depending, of course, on the plan you pay for. This involves allowing password sharing between at least some Netflix users. However, Netflix’s terms of service are also self-explanatory.
“The Netflix Service and any content accessible through our Service is for your personal, non-commercial use only,” the terms state, “and may not be shared with anyone outside of your household.”
In an announcement on Wednesday, March 16, Netflix explained in a company press release that it will begin incentivizing password sharers who don’t live in the primary account holder’s physical household to start paying. But only in certain places (for now). The practice, among other things, impacts “our ability to invest in new television programs and movies” for subscribers. That’s according to Netflix’s director of product innovation, Chengyi Long, in a company press release.
To fight against it? Netflix has launched a test in Chile, Costa Rica and Peru. It will ask people who borrow other people’s Netflix account passwords to start paying. Today’s news, meanwhile, should also warn password sharers in the United States, if they weren’t already.
Netflix knows how many of you are freeloaders
Netflix’s shareholder letter goes on to state that the company believes that all broadband homes will be potential Netflix customers.
But people who borrow other people’s Netflix account credentials stand in the way.
“In addition to our 222 million paying households,” the letter continues, “we estimate that Netflix is shared with over 100 million additional households, including over 30 million in the UCAN region. Account sharing as a percentage of our Paid membership hasn’t changed much over the years, but, coupled with the first factor, means it’s harder to grow membership in many markets – an issue that has been obscured by our COVID growth.
At the end of the line ? It doesn’t look like Netflix is going to leave the status quo of this issue in the US as it is for much longer.
More Netflix coverage: For more Netflix news, check out our coverage of the latest new Netflix movies and series to watch.