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Netflix cracks down on password sharing and is prepared for unhappy customers

Netflix cracks down on password-sharing and is prepared for unhappy customers

Netflix cracks down on password-sharing and is prepared for unhappy customers
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By Pihu Yadav  Jan 25, 2023 3:53:55 PM IST (Published)

Password-sharing is a practice where one person pays for their account and others use it, without having their own individual accounts — good for users but bad for Netflix, especially with the subscriber count going down and the competition getting tougher.

Netflix confirmed that it will be discontinuing password-sharing among users in its results for the latest quarter (October-December 2022).

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The streaming giant has been seeing a lower growth rate in subscribers for quite some time now and the company is set to change things around for the better. “We believe we have a clear path to reaccelerate our revenue growth: continuing to improve all aspects of Netflix, launching paid sharing and building our ads offering. As always, our north stars remain pleasing our members and building even greater profitability over time,” the letter read.
Password-sharing is a practice where one person pays for their account and others use it, without having their own individual accounts — good for users but bad for Netflix, especially with the subscriber count going down and the competition getting tougher.
People have far more choices now than they had back in the day and most platforms offer content at a way cheaper cost. For example, Disney+Hotstar offers 4K content at Rs 1,499 a year, Apple TV+ offers the same at Rs 99 per month, whereas for Netflix the price is Rs 649 per month. Netflix’s most basic plan, which is called Mobile and can only be streamed on either one phone or tablet at 480p (don’t even get me started) is at Rs 149 per month.
Cracking down on password-sharing, the company stated that its terms of use limit use of Netflix to one household and that it has built additional new features, including the ability for members to review which devices are using their account and to transfer a profile to a new account so the user does not have to start from scratch trying to teach Netflix what they like and don’t like. Users will also have the option to pay extra if they want to share Netflix with people they don’t live with.
In an interview with Bloomberg, Greg Peters, then ew co-CEO of Netflix said that he is confident of bringing back more subscribers, particularly people sharing an account with someone else. “Some of those folks are borrowing because they're more price sensitive, they're less engaged or whatever. But if we deliver a Wednesday every week, if we deliver a Glass Onion every week, we'll get the vast majority of those viewers back,” he said. Peters also understands that there will be unhappy customers and this will not be a “universally popular kind of event”.
Netflix said that it will start both paid sharing and ad-supported plans later in Q1 2023 (January-March). It is also prepared to face some “cancel reaction” in markets because of this move, which is natural given how costly Netflix plans are compared to its competitors. This would impact its near-member growth, as the company noted.
“...As borrower households begin to activate their own standalone accounts and extra member accounts are added, we expect to see improved overall revenue, which is our goal with all plan and pricing changes,” it said.
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