The internet is buzzing about Netflix’s (NFLX) recent move to crack down on password sharing on its platform.
The news isn’t exactly a shocker, but there’s little doubt the streaming entertainment service is getting serious about “free riders” who use Netflix and don’t pay a dime for doing so.
DON'T MISS: Netflix Stock Has Lagged FAANG in 2023
That’s still going to be okay as long as the users live under the same roof as the account holder. But for the college daughter who uses her parent’s account to watch “Ginny & Georgia” or the neighbor who borrows an account holder’s password to catch “Florida Man”, the streaming party is over.
In a May 23 blog post, Netflix noted the following changes on password sharing.
Starting today, we will be sending this email to members who are sharing Netflix outside their households in the United States.
A Netflix account is for use by one household. Everyone living in that household can use Netflix wherever they are — at home, on the go, on holiday — and take advantage of new features like Transfer Profile and Manage Access and Devices.
“If you want to share Netflix with someone outside your household, you can use these features.
--- Transfer a profile. Anyone on your account can transfer a profile to a new membership they pay for.
--- Buy an extra member. You can share your Netflix account with someone who doesn’t live with you for $7.99/month more.
According to Insider Intelligence, Netflix should lose subscribers for a second straight year in 2023, with the number of viewers falling by 0.5% this year to 170.6 million.
“Young adult viewership is expected to decline the fastest, with an estimated 4.1% drop for viewers ages 18 to 24 and a 2.1% decrease for those ages 25 to 34 in the US due to account sharing, which is particularly common among these demographics,” Insider Intelligence reported.
The fallout over the password-sharing crackdown seems to already be in play.
According to a new study of 1,000 streaming users by Daily Stoke, a lifestyle platform for younger consumers, 50% say they’ll cancel their subscriptions rather than pay for sharing a password with family and friends.
“More than 3 in 4 (79%) Americans think it’s fine to share streaming service passwords with people they don’t live with, and two in five don’t think the platforms should be cracking down on those who share passwords,” Daily Stoke reported. “In fact, half of American consumers say they will cancel their subscriptions if providers continue to implement measures against password sharing, and 64% already admit to being frustrated by current measures taken by providers.”
That’s not good news for Netflix or any streaming service.
Even so, don’t expect Netflix to back down from its password crackdown.
There’s no money in giving away your product for free – even if some streaming subscribers think companies should do so.
Get exclusive access to portfolio managers and their proven investing strategies with Real Money Pro. Get started now.
