Last week in a shareholder letter, Netflix confirmed that its new policy prohibiting password sharing could take effect by March end, according to CBS News. In October, the company announced its intention to alter its policy on password sharing and mentioned it would start charging for account sharing in the future, however, it didn’t specify a start date at that time.
The shareholder letter stated that the practice of account sharing, occurring in over 100 million households, negatively impacts Netflix’s ability to invest and improve its services. The company had a challenging year in 2022, including a loss of 200,000 subscribers in Q1, its first decline in over a decade. However, it had a strong finish to the year with exceeded forecast in its fourth-quarter revenue, operating profit, and membership growth, driven by popular content such as Harry and Meghan, which exceeded expectations.
As per the guidelines, individuals outside of your household will be required to have their own Netflix account for viewing. If the device is used outside of your home, Netflix may request verification before allowing it to access its content or switch the household account.
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Netflix wants its users to be able to enjoy its content while traveling, staying at a temporary residence, or even after a breakup. However, if a device is being used away from the primary account holder’s household for an extended period, verification may be necessary. On the other hand, if the device is connected to the internet in the primary account holder’s household, no verification will be needed.
Netflix utilize information such as IP addresses, device IDs, and activity on devices signed into the Netflix account. Netflix is watching you!
To drive growth, Netflix introduced a budget-friendly, advertisement-supported plan in November, which has contributed to “incremental membership growth.” The company believes that improving all aspects of Netflix, implementing paid sharing, and expanding its advertisement offerings will allow for the reacceleration of revenue growth.