Netflix cutting ‘free’ stream
In a crackdown, company to start charging U.S. users who share passwords outside households.
The era of free Netflix password sharing in the U.S. is coming to an end.
The streaming giant on Tuesday began alerting U.S. users who share passwords that either they or their nonhousehold members would need to pay up.
Users who share passwords must now pay an additional $7.99 a month for someone outside their household to stream through their accounts, the company said in an email to customers, which Netflix shared in a blog post.
If the sharer doesn’t want to pay extra, the password borrower will have to pay for their own membership.
“Your Netflix account is for you and the people you live with — your household,” the email reads.
The crackdown comes as streamers are under pressure to become more profitable.
In the past, when streaming services were focused chiefly on subscriber growth, the sharing of passwords among friends and family was more tolerated. That’s now changed.
Netflix estimated last year that more than 100 million nonpaying households were using its service, a stat the company shared after a quarter of subscriber losses.
Account sharing and piracy cost streamers and pay TV providers $9.1 billion in lost revenue in 2019, according to the market research and consulting firm Parks Associates. That’s expected to increase to $12.5 billion in lost revenue by 2024.
Netflix has rolled out efforts to encourage nonpaying users to subscribe in other countries, including Costa Rica, New Zealand and Canada. The company said that it has been pleased with the results so far and that customer reaction has been similar to that when price increases are announced.
“We see an initial cancel reaction, and then we build out of that, both in terms of membership and revenue as borrowers sign up for their own Netflix accounts, and existing members purchase that extra member facility for folks that they want to share it with,” Greg Peters, Netflix’s co-chief executive, said in an earnings presentation in April.