WHAT YOU NEED TO KNOW:
- The streaming giant said that such activity “undermines” its ability to invest and improve.
- The company said that it will start charging on such broad sharing by the end of March.
Netflix will be cracking down on free password sharing by the end of March, according to a shareholder letter distributed late last week.
Netflix previously announced its plans to change its password-sharing policy back in October. The streaming giant said that it would eventually start charging users who share their account passwords with people outside of their households, but did not give a specific date on when the new policy will take effect.
In the shareholder letter, the company said that it would start charging “later in Q1 [quarter one].”
Netflix said that with over 100 million users sharing their accounts more broadly than their households, such activity “undermines” its ability to invest and improve.
The company described 2022 as a “tough” year, having lost 200,000 subscribers in the first quarter of last year — its first subscriber loss in over a decade.
The company continued that the year ended on a “brighter finish” despite the early losses. It attributed its fourth-quarter revenue, operating profit, and membership growth to series and films that “outperformed” its expectations.
Netflix acknowledged that the planned crackdown on password sharing will possibly cause “near-term engagement, as measured by third parties like Nielsen’s The Gauge,” to be “negatively impacted.”
To combat this, the company plans to launch a lower-priced ad-supported plan in November to attract “incremental membership growth.”
Netflix stated, “We believe we have a clear path to reaccelerate our revenue growth: continuing to improve all aspects of Netflix, launching paid sharing, and building our ads offering.”
Source: CBS News