Netflix, the world’s largest streaming video company, warned a global crackdown on password sharing is coming amid reports that over 100 million global households use a shared password, with more than 30 million of those in the U.S. and Canada.
Although it is not the first time for such a warning to be issued, it seems like a serious warning this time, and it could mean an end to the rampant practice of borrowing login information.
In its quarterly shareholder letter, Netflix acknowledged it has purposefully allowed generous out-of-home password sharing because it helped get users hooked on the service.
But with competition from Disney, Warner Bros. Discovery, Paramount Global, NBCUniversal, Apple TV+ and other streamers eating into its growth, Netflix said it wants the millions of households sharing passwords to start paying. Said Netflix in a letter:
“Our relatively high household penetration — when including the large number of households sharing accounts — combined with competition, is creating revenue growth headwinds. Account sharing as a percentage of our paying 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 was obscured by our COVID growth.”
Netflix reported a loss of 200 000 paid subscribers in the first quarter ended March 31 — the first time in more than 10 years Netflix has lost subscribers during a quarter. The company projected it will lose 2 million more subscribers in the second quarter.
The streaming platform currently has 222 million subscribers worldwide. It enjoyed booming growth during the pandemic, but that customer surge has subsided — and now turned negative — as COVID-19 quarantines have largely lifted.