Netflix 'Completely Satisfied' With Pace of Password Sharing Crackdown

Netflix has been "completely satisfied" with the pace of the password sharing crackdown it initiated in the United States earlier this year, Netflix co-CEO Ted Sarandos said today at the UBS Global Media and Communications Conference (via Variety).

The streaming company first began eliminating password sharing in in several countries in Latin America in 2022, requiring those who wanted to share subscriptions with people outside of their direct household to pay an additional fee. Password sharing restrictions then expanded to Canada, New Zealand, and some European countries in February 2023, before coming to the U.S., UK, and other countries in May 2023. The tiered rollout gave Netflix time to assess customer reaction. "It was good to take it slow," said Sarandos at today's event. "That's why we didn't do it in one fell swoop."

Netflix allowed password sharing to proliferate for more than a decade before deciding to crack down on it. The change came because in the first quarter of 2022, Netflix lost subscribers for the first time in 10 years and saw a sharp drop in revenue. To boost revenue, Netflix put a stop to password sharing, raised prices, and launched an ad-supported tier.

According to Netflix, an estimated 222 million paying households were sharing with an additional 100 million households that were not being monetized.

Following the password sharing crackdown, Netflix said that it saw strong subscriber growth in countries where password sharing was restricted. Netflix in Q2 2023 added six million subscribers, including more than a million in the U.S. and Canada. Revenue increased in every region where paid sharing was rolled out, and signups ultimately exceeded cancelations. In the third quarter of 2023, Netflix gained 8.8 million new subscribers, up from 2.4 million new subscribers in Q3 2022, plus revenue increased by $64 million.

Netflix subscribers are now only allowed to share accounts with people who live in the same household, with Netflix restricting access based on IP and other location data. "A Netflix account is meant to be shared by people who live together in one household," reads the Netflix website. "People who are not in your household will need to use their own account to watch Netflix."

Along with removing password sharing, Netflix in October raised its prices in the United States. The Basic no-ads plan is now priced at $11.99 per month (a $2 increase), while the Premium plan is $22.99 per month (a $3 increase). Netflix did not change the price of its $6.99 ad-supported tier or its $15.49/month Standard plan.