Netflix is the top streaming service provider globally. Even though it faces tough competition from competitors like Amazon Prime and Disney Plus, it still stands as the top option for streaming entertainment.
For many years, people used to share the Netflix password. And how can we forget that in 2017 Netflix promoted this password-sharing practice by a tweet, “Love is sharing a password.”
During that period, Netflix’s primary aim was to increase viewership, and they did not mind password sharing as long as many people were watching. However, the situation has changed significantly after five years. And by the end of 2023, Netflix has declared that password sharing will be discontinued.
What went wrong?
One of the main reasons behind the ending of sharing passwords is the “loss of subscribers” that Netflix has been experiencing. In 2022, they lost almost 1.2 million subscribers for various reasons such as lack of interesting content, losing access to original content like Disney’s shows, tough competition from rivals, and the Russia-Ukraine war.
The report indicates that the company lost 970,000 subscribers in the first two quarters of 2022. This decrease in subscribers was not unexpected, as Netflix was already anticipating a loss of two million subscribers during its 2022 Q1 financial report. Furthermore, Netflix was revealed to lose approximately 700,000 subscribers when it withdrew its services from Russia after Russia-Ukraine. The decline in subscribers was not unexpected for the company, as Netflix had already projected a loss of two million subscribers in its Q1 financial report.
The fact that the company ultimately lost 1.2 million subscribers was not a shock to Netflix. Netflix has attributed this loss of subscribers to account sharing and competition.
Tough Competition
No doubt, Netflix has always been the leader in the streaming industry for many years, but it has recently faced stiff competition from the likes of Disney+, Amazon Prime Video, and HBO Max. This has led to declining subscribers, with many users switching to rival services. The content available on each streaming platform is unique, and TV shows that cater to the interests of particular audiences. Viewers have to decide which ones they are willing to pay to access.
To stem the tide, Netflix is looking to increase its revenue streams by targeting password sharers. Netflix is facing financial challenges due to the increasing competition in the market. Despite raising its subscription fees, the company is still unable to generate more revenue to invest in new content. To address this password-sharing crackdown, Netflix aims to generate revenue from the 100 million individuals who are sharing passwords.
Ad-Based Subscription
In order to increase its earnings and gain more subscribers, Netflix has implemented ad-based subscription plans. In 12 different countries, the company has introduced a more affordable option for its service that includes ads.
Netflix has excluded India from the list because it already offers an affordable monthly plan for mobile devices at Rs 179 per month. However, Subscribers who opt for the Basic with Advert plan will experience a video quality limit of 720p/HD, and viewers can expect about 4 to 5 minutes of ads per hour. Additionally, because of the licensing restrictions, subscribers to this plan will have limited access to certain films and TV series.
The Crackdown Process
Netflix initiated its crackdown on password sharing in Latin America in 2022 and has extended it to Canada, New Zealand, Portugal, and Spain as of February 8, 2023. If users wish to continue sharing passwords, they must pay an additional fee, which has already been tested as a $3 add-on in certain countries.
Netflix is implementing measures to curb password sharing in countries where it is prevalent. The company monitors the devices used to access its platform to identify users who share their accounts. To prevent password sharing, they will prompt devices to periodically check in at the user’s home location, typically once a month. If Netflix detects that a password is being shared outside of the household, the device will be blocked.
How will Netflix identify whether someone is sharing their account?
Netflix has the ability to detect whether you are sharing your account with someone who is not part of your household by utilizing the vast amount of user data they collect. This data includes information such as what you watch, where you watch it, the location of your home, as well as device IDs, account activity, and IP addresses. By analyzing this information, Netflix can determine whether the account is being accessed by you or someone outside of your household.
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Conclusion
The Netflix password crackdown is an attempt by the company to address the issue of password sharing, and this has been costing it billions of dollars in revenue every year. The crackdown will likely be implemented gradually in different regions, and users may be required to purchase additional subscriptions if they want to access Netflix content on multiple devices simultaneously.
