By Phillip Swann
The TV Answer Man – @tvanswerman
TV Answer Man, I can’t understand why Netflix is going to stop us from sharing our passwords with our family away from home. We have a daughter in college and we let her use our password so she can watch Netflix at school. She would never subscribe to Netflix otherwise so what are they gaining by not letting her watch? We may cancel if they do this. Please let them know. — Brad, Port Republic, Maryland.
Brad, Netflix once was a supporter of password sharing as top executives and company social media accounts frequently suggested it was acceptable and helpful to driving subscriptions. The company’s position was that password sharing led to more people giving Netflix a try, which in turn led to them ultimately subscribing.
But that’s about to change.
For starters, Netflix now officially says at its web site that password sharing is against the rules:
“A Netflix account is meant to be shared in one household (people who live in the same location with the account owner). People who are not in your household will need to sign up for their own account to watch Netflix.”
And if you’re the type that tends to ignore rules, Netflix said last month that it plans to introduce ‘paid sharing’ in the United States sometime this quarter. (The quarter runs from April to the end of June.) The streamer has already implemented paid sharing — you are charged a fee if you share your password with someone outside your IP address — in several countries including Canada, New Zealand, Spain and Portugal.
Netflix acknowledges that paid sharing has trigged a significant number of cancellations but says it will increase revenue overall. Plus, the company believes many of the people who cancel will come back.
Why has Netflix changed its position on this issue?
Netflix, which once dominated the domestic and global streaming markets, is now facing stiff competition from multiple (and well-financed) companies such as Warner Bros. Discovery’s HBO Max, Disney Plus, Amazon’s Prime Video, Paramount Plus, Hulu and Comcast/NBC’s Peacock. The streaming war is intense with companies fighting over every customer and every penny. As a result, Netflix has actually lost subscribers in the U.S. and Canada over the last 12 months. (74.58 million after the 2022 first quarter down to 74.40 million after the 2023 first quarter) although it continues to do well worldwide.
The streamer needs to find new ways to generate revenue, which explains paid sharing, the new ads-included $6.99 a month plan, and the elimination of free trials. Ideas that were once considered unacceptable at Netflix headquarters are now welcomed with open arms. Netflix has even done two livestreams, something it once said it would likely never do.
As the streaming war continues to escalate, look for Netflix (and its competitors) to introduce even more new ideas, some of which may not be seen as consumer-friendly.
Brad, hope that makes sense. Happy viewing and stay safe!
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— Phillip Swann