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Netflix to Make Account Holders Pay Up for “Illegitimate” Password Sharing

Netflix to Make Account Holders Pay Up for “Illegitimate” Password Sharing

Netflix is unhappy about the fall in its subscribers. The streaming giant estimated that around 200,00 fewer households are using the platform in Q1 because of password-sharing. They even intimidated the shareholders about the loss of two million subscribers in Q2 of 2022. 

After pulling out of Russia in March amidst the Ukraine war, Netflix lost 700,000 subscribers. Due to the recent price hike, 600,000 more Americans and Canadians stopped using the service. The cost of the basic plan was raised from $9 to $10 per month, and standard from $14 to $15.50. In the UK, with the price being increased by £1, households cancelled more than 1.5 million streaming subscriptions with 38% saying they want to save money. 

However, most other users have adapted to the price increase in a sneaky way — password sharing. Netflix has alleged that more than 100 million households share their passwords outside their own roofs. This significantly decreases the chances of users upgrading to a premium account for more profiles. 

Dealing with its first loss in over a decade, Netflix has decided it’s going on a crackdown, not by curbing “illegitimate” sharing but by making the account holder pay up. According to the website, the platform launched two new features last month in Chile, Costa Rica, and Peru — users can add up to two extra members they don’t live with for a price and will be able to transfer their profiles to a new account or an extra member sub-account. The benefit? retaining the viewing history, their lists and personalized recommendations. 

According to BBC, Netflix boss Reed Hastings had previously described the practice as “something you have to learn to live with”, even admitting that account sharing had probably brought in more people to the platform. 

Changing his mind, however, Hastings recently said account sharing was making it difficult to attract new subscribers in some countries. “When we were growing fast, it wasn’t a high priority to work on [account sharing]. And now we’re working super hard on it,” he told the shareholders. Hastings also hinted at Netflix launching a free ad-supported service like Disney and HBO. This could open a new revenue stream for the streaming service which had so far stood against advertising. 

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Analysts say it could open a significant new revenue stream for the company, which has so far shunned advertising. This, however, would cause a further decline in the number of subscribers, with more opting for a cheaper streaming service with fewer advertisements. People often choose online streaming because of the lack of obligatory advertisements, thereby defeating its purpose. With the recent influx of shows nobody asked for, Netflix has perhaps lost the grip it once had on its users. 

Despite this, Netflix said that even with the cancellations, the price rise would yield more money for the firm. However, analysts say the rising cost of streaming services is annoying households as the cost of living rises.

 

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