In its report for the last quarter of 2022, Netflix announces that it will stop free password sharing. It will still be possible to use one and the same account in several households – but only at an additional cost. Netflix has been working on developing a payment model to prevent password sharing for some time. This model is already being tested in South America. For the first quarter of 2023, Netflix plans to expand the model to other countries and regions. “The account sharing that is so prevalent today undermines our long-term ability to invest in and improve Netflix and grow our business,” Netflix said in a statement quarterly report.
To its investors Greg Peters – Netflix’s newest co-CEO – said the company plans to implement these changes in the first quarter of 2023. However, the approach would be staggered, working through one set of countries at a time. You will see “that it happens in the next few quarters,” he assured. Peters went on to say that Netflix expects some layoffs in response to the changes. However, the tests in South America had shown that new customers could be won, especially those who had previously used non-household accounts. Overall, Netflix expects higher revenues.
Low additional costs and additional comfort functions
Already in a statement announcing the launch of the new model in South America In July 2022, Netflix justified the move by saying that widespread account sharing – more than 100 million households worldwide use the streaming service – could weaken the company’s investment capabilities in the long term. At the end of 2023, Netflix had 231 million paying users. About a third of users share an account with people outside of their household. Unlike in the past, this is now expressly forbidden in the terms of use. So far, however, Netflix had not punished violators. In the future, password sharing should still be possible – but only at an additional cost. If Netflix were to transfer the model tested in South America to other regions, the subscription price would only increase by a few euros per additional household. There it is an additional $ 2.99 – significantly cheaper than a second user account.
To make the transition palatable, Netflix has come up with some convenience features for the South American market. Netflix boss Peters emphasized that these functions would also be implemented when the model was introduced in other countries. So it should be easy for the previous beneficiaries to convert an existing user profile into their own account. People who want to share their account for a fee should be able to add and remove households at the touch of a button. It should also continue to be possible to use Netflix on vacation and when traveling.
There doesn’t seem to be a more concrete timetable for the changeover in individual countries. When SZ asked about this, Netflix did not answer.