Netflix Inc. has started implementing its long-awaited move to regulate password sharing in the UK and US, revealing plans to charge extra for users sharing accounts across different households.
“Netflix accounts are intended for a single household’s use,” the streaming titan clarified on Tuesday, confirming plans to send emails to users found sharing their accounts outside of their own homes.
Netflix will request these users to either switch accounts and pay individually if they are from different households or choose to add an extra member to their accounts for an added monthly cost of US$7.99 in the US.
In the UK, users will be required to pay an extra £4.99 monthly for standard and premium accounts, which are currently billed at £10.99 and £15.99, respectively.
For UK subscribers of the basic and standard tiers paying between £4.99 and £6.99 monthly, they will not have the option to add extra members as per Netflix’s website guidelines.
Those travelling or using mobile devices are still allowed to access their own household’s Netflix account, as confirmed by the company.
Netflix’s prior estimates indicated that 100 million of its 233 million global subscribers were sharing their accounts across different locations.
This initiative to charge for account sharing is designed to increase revenue. However, the strategy’s pilot in Spain resulted in a loss of 1 million subscribers in the first quarter of the year, according to Kantar data.
Michael Hewson, a market analyst at CMC, suggested that while there might be an initial dip in subscriber numbers, this move could eventually benefit the company. “Although it could lead to some early cancellations, potentially slowing down the subscriber growth rate, if the goal is to increase revenue, it could maintain a steady cash flow and stable profit margins,” Hewson explained.
In the first quarter, Netflix reported revenues of US$8.16 billion. However, the addition of only 1.75 million subscribers fell below analysts’ expectations.
Netflix, which faced its first subscriber decrease in a decade in early 2022 and a 50% stock price drop over the year, has been affected by economic uncertainties and increasing competition from platforms like Disney+, Apple TV, and Amazon Prime Video.
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