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Netflix makes it clear it's planning to make account sharing paid for all
- Netflix has made it clear that it will soon start monetizing multi-household account sharing.
- The company is currently testing paid password sharing in a few countries.
In a letter to its investors attached with its first-quarter earnings, Netflix made it very clear that it aims to boost profitability by imposing curbs on password sharing. The company made the following statement in the letter:
The big COVID boost to streaming obscured the picture until recently. While we work to reaccelerate our revenue growth through improvements to our service and more effective monetization of multi-household sharing — we’ll be holding our operating margin at around 20%.
The part about monetization of multi-household sharing is the one to focus on here. We previously conducted a poll on our website asking readers if they would be okay paying extra for Netflix password sharing, and they vehemently opposed the idea.
Netflix says it has 100 million-plus households using another household’s account. “This is a big opportunity as these households are already watching Netflix and enjoying our service,” the company noted.
The service further said, “There’s a broad range of engagement when it comes to sharing households from high to occasional viewing. So while we
won’t be able to monetize all of it right now, we believe it’s a large short to mid-term opportunity. As we work to monetize sharing, growth in ARM, revenue, and viewing will become more important indicators of our success than membership growth.”
Meanwhile, Netflix has reported a loss of 200,000 subscribers in the quarter gone by, and it sounds like things aren’t going to improve anytime soon. The service has also projected a loss of 2 million subscribers over the next financial quarter. However, CFO Spence Newman has reassured investors that subscriber growth should resume in the latter half of the year.
Netflix is also dipping its fingers into the ad-supported streaming market. CEO Reed Hastings announced that cheaper plans with ads should arrive on Netflix within a year or two.
It looks like Netflix is in a catch-22 situation. On the one hand, it wants to introduce paid password sharing to grow revenue, while on the other hand, it’s facing a subscriber exodus for the first time in a decade. In any case, the former may not be a welcome move for existing Netflix subscribers. The company could see further exits if people have to pay more for sharing their passwords.