Netflix Could Make A Staggering Amount Of Money By Banning Free Password Sharing
Netflix has known for years that a good chunk of its subscribers share their passwords with people who live outside of their household. It's become a pretty common joke for people to talk about revoking their ex's Netflix access after a breakup, or cutting off their parents when they've posted some weird conspiracy theory meme on Facebook.
Well, Netflix is finally cracking down on the practice, and is about to require subscribers to pay an additional fee for additional households to keep on streaming. "Why would they do that?" you may ask yourself. "They've even joked about true love being password sharing!" you may cry.
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All of this may be true, but Netflix began a limited rollout of testing the password sharing about a year ago, and last week announced it would be continuing the tests in Chile, Costa Rica, and Peru. It looks like the plan will include the option for subscribers to pay an additional $2-$3 per month for each out-of-household member to their existing monthly fee. Well, the analysts over at Cowen & Co. (per Variety) did some quick math and found that if Netflix pursued the additional charges for allowing out-of-household access, it could earn roughly $1.6 billion per year. That's enough to make three more "Knives Out" movies and have some spare change left to make, like, 10 seasons of "Squid Game."
Say farewell to your extra spending money
Cowen & Co. estimates that roughly half of the subscribers who share passwords will opt into the smaller additional charge, while the other half will sign up for their own separate, paid account. The additional charge would be beneficial for families that share passwords for children who may share time in different households, while the separate sign-ups would be great for lousy people who won't stop mooching off of their exes. Cowen & Co. estimates roughly 10% of U.S. Netflix households include a non-paying subscriber. I'd offer my opinion on whether or not that estimate seems too low ... but snitches get stitches and if anyone asks me about Netflix password sharing habits, call me Jon Snow because I know nothing.
The pivot to monetize password sharing is likely due to the streamers' stagnant growth, and the growing competition from HBO Max, Paramount+, Peacock, and more threateningly, Disney+. While Cowen & Co. seem confident that this decision would be a game-changer, other Wall Street analysts like Matthew Harrigan from Benchmark Co. are unconvinced. Harrigan told THR that the decision "cannibalizes full-ride member growth" and won't turn out as well as Netflix would hope.
Regardless, the days of password sharing seem to be going the way of the Dodo, and a lot of us better prepare to have very frustrating phone calls as we try and walk our parents through setting up their own accounts and explaining what "browser authentication" means. Godspeed, everyone.