Netflix started testing paid password sharing for accounts in a household last month. The move came as a part of the company’s efforts to crack down on the practice of sharing passwords among friends and family members. At the time, Netflix’s Director of Product Innovations Chengyi Long had said that the practice of password sharing was impacting the company’s ability to invest in new TV and movies. Now, it looks like the company is getting serious about imposing those curbs.
In a letter to the investors announcing the quarterly results for the first quarter of the year, the company said that the company planned to monetise multi-household sharing this year. “The big COVID boost to streaming obscured the picture until recently. While we work to reaccelerate our revenue growth – through improvements to our service and more effective monetization of multi-household sharing – we’ll be holding our operating margin at around 20%,” the company wrote in the letter.
The company estimates that Netflix passwords were being shared with over 100 million users in households. The company said that “account sharing as a percentage of our paying membership hasn’t changed” drastically over the years. However, account sharing coupled with the growth in the broadband homes market (something Netflix believes is beyond its direct control) made it harder for the company to grow membership in many markets.
As a part of its measures to crackdown on the practice of account sharing, the company is now looking at various means of monetising over 100 million households that are using another household’s account. “This is a big opportunity as these households are already watching Netflix and enjoying our service,” the company added.
In the letter, Netflix also said that features like profiles and multiple streams have been very popular on the platform but they have also created confusion about when and how Netflix can be shared with other households. “So early last year we started testing different approaches to monetize sharing and, in March, introduced two new paid sharing features, where current members have the choice to pay for additional households, in three markets in Latin America,” the company said.
Now, Netflix realises that password sharing happens on many levels – when people use it occasionally and when people use it frequently. “So while we won’t be able to monetize all of it right now, we believe it’s a large short- to mid-term opportunity,” Netflix added.
What it means for you?
While it isn’t entirely clear at the moment, but it is possible that Netflix expands its paid password sharing for accounts feature to markets across the globe. This means, users who share their password will have to pay extra for sharing their password. It is also expected to introduce new measures to limit the devices on which a particular account can be accessed.
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