Netflix’s clampdown on password sharing is finally being implemented for U.S. subscribers and other markets, albeit with a delayed launch.
Initially planned for the first quarter of this year, the introduction of “paid sharing” was postponed to the summer due to cancellations in markets where the changes had already been implemented.
Under the new rules, U.S. subscribers will be required to remove unauthorized users from their Netflix account or pay an additional $7.99 per month for members outside their main household.
To facilitate this transition, Netflix provides tools that allow current subscribers to view the devices logged into their accounts and remove any unauthorized ones.
In addition, users sharing someone else’s account can choose to transfer their profile to a new account, which will retain their viewing history and watchlist.
While this feature has faced backlash from consumers, Netflix reassured investors that despite some early cancellations, the password crackdown will ultimately contribute to the company’s long-term growth and financial health.
During the first-quarter earnings report, Netflix co-CEO Greg Peters likened the reaction to the password crackdown to how subscribers responded to price increases.
The testing of this feature initially began in Latin American markets before expanding to Canada, New Zealand, Portugal, and Spain earlier this year.
Peters emphasized the positive results seen in these new countries and the subsequent increase in membership and revenue as users either signed up for their own Netflix accounts or purchased additional memberships for those they wanted to share with.
In Q1, Netflix reported a net increase of 1.75 million global subscribers, falling short of Wall Street’s estimate of 3 million.
This brought the total number of accounts globally to 232.5 million.
Netflix confirmed that it plans to implement the password-sharing changes for U.S. subscribers on or before June 30, as revealed during its recent earnings report.
The company announced via its blog that it is sending an email to U.S. members who are sharing their Netflix account, reminding them that the account is intended for use by one household.
The email highlights new features like Transfer Profile and Manage Access and Devices, and provides further help documentation if necessary.
While previous tests indicated that Netflix may rebound after implementing the password crackdown, the company is yet to observe the results in its largest and most significant market, the U.S., where it faces increased competition for users’ time and money.
It is worth noting that this announcement coincides with HBO Max’s rebranding as Max, combining HBO and Discovery+ content under one service.
Paramount+ will also be adding Showtime to its platform next month, on June 27th, further intensifying the competition in the streaming market.
