Netflix to Crackdown on Password Sharing, Limits Membership to Household
By Movieguide® Contributor
Netflix announced on Tuesday that it is planning to move forward with its password-sharing crackdown.
“Your Netflix account is for you and the people you live with – your household,” Netflix said in an email to its U.S. customers. To share an account with someone living outside of the household, Netflix will now charge a $7.99 a month fee.
This change in business model is rolling out across Netflix worldwide, having already been tested in a few key markets. Since February, Netflix subscribers in Canada, New Zealand, Portugal, and Spain have been disallowed from sharing accounts, requiring users outside of the household to pay for an additional account.
During its Q1 report, Netflix shared that the initial reaction in these countries with paid account sharing has been negative, with widespread cancellation of accounts occurring. However, the company points to the Canadian market where the subscriber base has grown, after an initial drop, since paid sharing has been launched.
“It’s very much like a price increase – we see an initial cancel reaction,” Netflix co-CEO, Greg Peters, said. “And then we build out of that, both in terms of members purchase that extra member facility for folks they want to share it with.”
“[Some password borrowers] are watching as much of our shows as a normal paying account, and those folks have very strong likelihood to convert [to paid sharing plans], I would say… And if you’re watching much less, its much less likely you’ll ultimately convert. But even in that case, I’d say this represents a really important structural shift where we’ll develop that on-to-one relationship without pricing distortion, without membership distortion, with a while new range of members. So we’ll see membership grow through that approach. We’ll see revenue grow through it as well,” Peters added.
While Netflix’s password-sharing crackdown limits membership to users within the household, the company has clarified that subscribers will be able to access their account while traveling or on vacation.
“You can easily watch Netflix on the go and when you travel – either on your personal devices or a TV at a hotel or vacation home,” the email said.
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