Plot twist for the streaming giant

Everything you need to know about Netflix's looming crackdown on password sharing (if you're still watching).

Netflix is "working super hard" to stop account sharing. Does it matter? 

 

Here's the word from streaming giant's CEO Reed Hastings. He told shareholders in a call on Wednesday to answer for Netflix's shocking drop in subscribers that the streaming giant was going to crack down on password sharing.

Netflix lost 200k subscribers over the first three months of this year - the first time they lost more subscribers than they gained in a decade. But the real hammer blow is that they expect another two million subscribers to fall off from April to June this year.

Yes, password sharing accounts for around 100 million non paying households (in addition to the streamer's 222 million paying households).

Netflix said working to get more of those customers paying for their accounts was a big part of their new strategy. 

"When we were growing fast, it wasn't a high priority to work on [account sharing]. And now we're working super hard on it," Hastings told shareholders.

He said the results means there's less money to invest in new shows and films.

There's a lot of Netflix originals we didn't ask to be made, just saying.

When is this happening?

Netflix said "monetising sharing" will be a focus for them in the "short to mid term" in its shareholder report and then, in the call to shareholders executives suggested that could happen in 2023, according to reports.

How will it work?

It's most likely that Netflix will roll out  payment plans for password sharing which it is currently testing in Chile, Costa Rica and Peru - to other countries. 

Since last month, subscribers of Standard and Premium plans in Chile, Costa Rica and Peru can add accounts of up to two people outside their household. 

But they will be required to pay an extra monthly fee of about US$3-4 per month on top of their regular monthly payment.

Netflix did not tell shareholders how they would enforce the rules.

In this Latin American experiment, they are also trying to spot when one account is being used across multiple households by tracking IP addresses and device IDs. If someone is found to be outside the household, they are prompted to sign up for a "sub account". 

Netflix Chief Operating Officer Gregory Peters told investors on Tuesday that the company isn't trying to stop you sharing a log in with your sister. "But we're going to ask you to pay a bit more to be able to share with her and so that she gets the benefit and the value of the service, but we also get the revenue associated with that viewing."

But I've been sharing for years - why now?

Netflix  had "learnt to live" with password sharing, Hastings said. Investors were told in a statement this week that password sharing “likely helped fuel our growth by getting more people using and enjoying Netflix”.

But now, the shareholder report stated, they are struggling to grow their membership base and "not growing revenue as fast as we’d like". 

Netflix also said they were suffering from stiff competition from a growing number of on-demand services, significant growth during the early Covid period, inflation, and their decision to drop 700,000 Russian subscribers due to the Ukraine conflict. 

In Australia alone, we have Netflix, Binge, Disney+, Stan, Prime and Paramount all vying for our attention with exclusive - and arguably much better content.

The streamer certainly has its critics. 

Not long after Netflix's shares plunged off the back of its results, Elon Musk, the billionaire Tesla founder, Tweeted that “the woke mind virus is making Netflix unwatchable’’.

The woke mind virus is making Netflix unwatchable

— Elon Musk (@elonmusk) April 20, 2022

This next season of Stranger Things better be damned brilliant.