Netflix's US Password Sharing Crackdown Is Coming Soon

Netflix delayed the launch of its "paid sharing" program in the U.S. until the second quarter of this year. The streaming giant hopes that these plans will crack down on password sharing among multiple households, and they have already been tested abroad. Netflix has yet to say how much this will cost subscribers in the U.S.

After Netflix conducted experiments with paid sharing in Latin America last year, the plans became available to subscribers in Canada, New Zealand, Spain, and Portugal in February. The plan allows Canadian subscribers to add additional plans for those outside their household, which cost CAD$7.99 in addition to the already monthly subscription they pay. The additional plans cost NZD$7.99 in New Zealand, 3.99 euros in Portugal, and 5.99 euros in Spain. During an earnings call on Tuesday, Netflix co-CEO Greg Peters said the pricing will be higher in "more affluent countries," reports The Hollywood Reporter.

Although the company was pleased with the tests during the first quarter, the company said the U.S. launch was pushed back until the summer so they can learn more about how the subscribers in the test markets are reacting. The launches in Canada, New Zealand, Spain, and Portugal lead Netflix to believe it took "the right approach" to crack down on password sharing.

"As with Latin America, we see a cancel reaction in each market when we announce the news, which impacts near-term member growth," the company explained in its earnings letter. "But as borrowers start to activate their own accounts and existing members add 'extra member' accounts, we see increased acquisition and revenue. For example, in Canada, which we believe is a reliable predictor for the U.S., our paid membership base is now larger than prior to the launch of paid sharing and revenue growth has accelerated and is now growing faster than in the U.S."

The move is meant to help Netflix add some much-needed revenue, just as the $6.99 per month ad-supported tier has done. However, the cost is angering longtime users who are used to watching Netflix outside their own homes and sharing passwords. In January, Peters admitted that there could be some subscriber loss in the short term after the paid sharing plan launches. The widespread sharing of passwords among friends and family "undermines our long-term ability to invest in and improve Netflix, as well as build our business," Netflix said in its January earnings letter.

Netflix added 1.75 million subscribers during the first quarter of 2023, the first full quarter without former CEO Reed Hastings at the helm, notes Verge. Netflix now has 232.5 million subscribers globally. The company also announced plans to shutter its 25-year-old DVD rent-by-mail service.