Netflix Reportedly Kicks off New Year With Unpopular Decision on Sharing Passwords

Netflix will impose tighter password-sharing restrictions at the start of 2023, affecting 100 million subscribers. Amid Netflix's slow subscriber growth since the Covid pandemic, insiders believe the streamer will finally take decisive action. Many subscribers have been lost due to password sharing, according to a source familiar with the issue who spoke to the Wall Street Journal (WSJ). The source said that co-CEO Reed Hastings told senior executives that password sharing has been going on far too long and that the pandemic only obscured the problem. While the exact policy and how it will be implemented remain unclear, consumers can expect that the company will track password sharing and shut it down unless they want to pay an additional fee. 

In South America, Netflix trialed this and charged an extra $3 to $4 a month for a second home, but it later 'sunset' the program. The WSJ source noted Netflix would likely introduce the ban with caution because it fears backlash since it would affect 100 million people who borrow passwords. "Make no mistake, I don't think consumers are going to love it right out of the gate," Co-CEO Ted Sarandos told investors this month. Moreover, he said it was up to the company to convince users of the service's value. The 223 million-subscriber Netflix will be the first streaming platform to crack down on password sharing, but media executives do not believe it will be the last. In the US and Canada, Cowen Inc. estimated Netflix could generate an additional $721 million in revenue. Netflix's market cap is around $130 billion. 

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Cowen's estimate was based on its survey of consumers who share an account with someone they don't live with, asking how they would react to an upcharge of $3. "It's a boost and it can definitely help, but it's also a one-time boost," Senior Equity Analyst at Morningstar, Niel Macker, told WSJ. According to him, Netflix isn't considering how many consumers will drop their subscriptions, and the move will only temporarily boost the company. Consumers and Netflix might face issues when traveling and trying to use their accounts, a source familiar with the internal discussions told WSJ.  It has been reported that Netflix has considered letting consumers notify it when they move geographically, as they do with credit cards. As of yet, Netflix has not announced its plan to limit password sharing nor set a price for adding an additional household.