The looming changes announced late Tuesday, April 19, 2022, are aimed at helping Netflix regain the momentum that has been lost during the past year as pandemic-driven lockdowns that kept people at home lifted and other deep-pocketed rivals such as Apple and Walt Disney rolled out competing video services that began to chip away at its vast audience.
The surprising net loss of 200,000 subscribers rattled investors, who had been told by the company to expect a gain of 2.5 million subscribers.
The Los Gatos, California, company estimates that about 100 million households worldwide are watching its service for free by using the account of a friend or another family member, including 30 million in the U.S.
In Costa Rica, for instance, Netflix plan prices range from $9 to $15 a month, but subscribers can create sub-accounts for two other individuals outside their household for $3 a month.
Alexander Klein, who lives near Albany, N.Y., has subscribed to Netflix since 2013 and shares his account with his mother-in-law.
“I think we would see competitors take different strategies here,” said Raj Venkatesan, a professor of business administration at the University of Virginia.
For years, amid rapid global growth, Netflix has looked the other way at the not-so-secret practice of subscribers sharing passwords beyond their households.
The easing of the pandemic is giving consumers entertainment options beyond binge-watching their favorite shows, and rising inflation is making families think twice about how many different streaming services they’re willing to pay for.
All of this has given investors major jitters for months.
“It feels like this is Netflix’s ‘come-to-Jesus’ moment,” said Hamilton, a former lawyer for movie studios.
“I think we may be at the point of no return for password sharing,,” said Ben Treanor, a digital marketing strategist for Time2Play, a gaming site that recently studied the “streaming swindlers” phenomenon.
Back in 2011, it unveiled plans to begin charging for its then-nascent streaming service, which had been bundled for free with its traditional DVD-by-mail service.
“I specifically signed up for Netflix back in the day because there were no ads,” he said.
Stalwarts like David Lewis in Norwalk, Connecticut, say the changes don’t seem like a big deal.