After a limited rollout of the restriction assisted the company in adding over 6 million members in the quarter ending in June, Netflix announced it is spreading the crackdown on password sharing to users in India and every other market starting today.
The streaming giant announced that starting on Thursday, it will begin to address account sharing between households in almost all of its remaining nations. The habit of swapping account passwords was originally encouraged by Netflix, but now it poses serious problems for its future commercial prospects.
To the dismay of many subscribers, it started testing the restriction last year and, in 2023, extended it to a number of other nations, including Canada, New Zealand, Portugal, Spain, and the United States. Those who shared the password on Netflix were able to pay an additional fee in some of the aforementioned markets to accommodate their friends.
The company has made it clear that clients in the nations where it is now implementing account sharing limitations won’t be offered a second membership choice. The decision was made for the following reasons, according to the company’s letter to shareholders: the relatively low market penetration in these areas; the availability of more affordable Netflix subscription levels.
Given that we recently reduced prices in many of these nations (such as Indonesia, Croatia, Kenya, and India), and that penetration is still quite low in many of them, we don’t offer an additional member option in these markets because we have plenty of room to grow without adding complexity. Existing profiles can be moved to new and active accounts by households borrowing Netflix.
According to the company’s Wednesday announcement, Netflix’s crackdown on password-sharing contributed to a strong subscriber growth in the quarter ending in June. The corporation reported gaining 5.9 million users after losing around 1 million clients in the same quarter last year. This growth is mostly attributable to people who decided to pay for their own accounts once they were no longer allowed to share the service for free.
Spencer Neumann, CFO of Netflix, stated that the company’s revenue increase is “largely driven by our paid sharing rollout.” It is our main revenue accelerator for the year, and we expect that impact to grow over future quarters, he continued.
The continuous campaign against password sharing may make Netflix’s advantage in many markets even more vulnerable. Consider India, where JioCinema, a portal supported by James Murdoch and Mukesh Ambani, competes fiercely with Netflix. Along with hosting some of the most famous athletic events in the area, JioCinema also streams a ton of well-liked television episodes and motion pictures from NBC, HBO, and Warner Bros. An yearly subscription to JioCinema costs roughly $12.
