Netflix Password Sharing Is Seemingly Doomed

The days of sharing your Netflix password with family and friends could soon be a thing of the past. In its quarterly shareholder letter on Tuesday, the streaming giant warned a global crackdown on password sharing could be coming sooner rather than later. The news came as Netflix ended Q1 of 2022 with 221.64 million subscribers, which was down from 221.84 million in Q4 of 2021, with the company suggesting that password sharing has been hampered subscription growth.

In the letter, Netflix estimated that in addition to the nearly 222 million paying households, "over 100 million additional households" worldwide are using shared Netflix accounts. This includes more than 30 million in the U.S. and Canada. While Netflix said account sharing has changed much over the years, with the sheer number of its current subscribers, it means it is more difficult for the company to "grow membership in many markets." As a result, Netflix said it is looking to begin cracking down on account sharing across the globe, something the company called a "big opportunity."

"This is a big opportunity as these households are already watching Netflix and enjoying our service," the company wrote in its letter. "Sharing likely helped fuel our growth by getting more people using and enjoying Netflix. And we've always tried to make sharing within a member's household easy, with features like profiles and multiple streams. While these have been very popular, they've created confusion about when and how Netflix can be shared with other households."

Last year, Netflix began "testing different approaches to monetize sharing," and in March of this year, the streamer rolled out the "Add an Extra Member" feature for subscribers in Chile, Costa Rica, and Peru. The feature allows Standard and Premium plan subscribers to add sub accounts to up to two people who do not live with them. These sub-subscribers will have their own profile, login, and password. The main account holder will pay an extra 2,380 CLP in Chile, 2.99 USD in Costa Rica, and 7.9 PEN in Peru in addition to the cost of their Standard or Premium subscription.

Netflix said Tuesday that "there's a broad range of engagement when it comes to sharing households from high to occasional viewing," adding that "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 chief operating officer and chief product officer Greg Peters explained in a video regarding this quarter's earnings, "We're not trying to shut down that sharing. But we're going to ask you to pay a bit more to be able to share."