According to Netflix’s October letter to shareholders, the company will begin charging additional fees for users who share their login credentials beginning in early 2023.
Netflix has suffered huge revenue losses and witnessed a rapid drop in subscriptions. Password sharing has been cited as one of the reasons for Netflix’s slow growth.
Netflix reported earlier this year that subscribers for the first time in over a decade were losing, with its subscriber count dropping by another 1.3 million in the US and Canada and 1 million worldwide in the last quarter. As a way to rectify this, Netflix has also begun to urge subscribers not to share their passwords.
When Netflix announced in April that it would roll out a pilot password-sharing program, the company faced immediate backlash. However, this week, Netflix confirmed it is still moving forward with its plan to monetize account sharing by charging subscribers an extra fee for sharing their account with others outside their household.
Taking a tough stance against account sharing, Netflix noted in its earnings report, “Finally, we’ve landed on a thoughtful approach to monetizing account sharing and we’ll begin rolling this out more broadly starting in early 2023. After listening to consumer feedback, we are going to offer the 5, excluding China and Russia, where we don’t operate. 6 ability for borrowers to transfer their Netflix profile into their own account, and for sharers to manage their devices more easily and to create sub-accounts (“extra member”), if they want to pay for family or friends. In countries with our lower-priced ad-supported plan, we expect the profile transfer option for borrowers to be especially popular.”
There has been no word from the OTT platform as to what the price will be for sharing passwords, but it is expected to be somewhere between $3 and $4. In an interesting development, Netflix users who aren’t interested in paying additional fees can use their new migration tool to transfer their profiles without paying any extra charges.
Netflix announced recently that it added 2.4 million subscribers to its third-quarter earnings report, higher than the 1 million they projected in the previous quarter. As it prepares to launch its new lower-priced, ad-supported subscription tier in early November, the company forecasts a gain of 4.5 million subscribers in the fourth quarter. The company’s new ad tier will initially be available in 12 countries, where netflix expects its profile-transfer option to be “especially popular.”
The company has also launched lower-priced ad-supported plans as part of its efforts to increase revenue. On November 3rd, Netflix is launching its $6.99 per month ad-supported tier, called Basic, in the US, Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico, Spain, and the UK. Ads lasting between 15 and 30 seconds will be served by Microsoft in partnership with Netflix. With this new tier, however, subscribers do not have access to the full Netflix library due to licensing restrictions. Basic Netflix subscribers are not able to download or view content in HD on their devices. Netflix has not yet announced plans to launch cheaper plans in India.