Confirmed: Netflix to Introduce New Password-Sharing Rules in the United States This Quarter
On Tuesday, Netflix, the world’s largest streaming service, reported its first-quarter 2023 earnings and revealed that it had added 1.75 million subscribers to bring its global total to 232.5 million customers. In the company’s letter to shareholders, it confirmed that while the initial plan had been to roll out broad efforts to curb password sharing in the first quarter of the year, it pushed the plan back to Q2 in order to gather as much information on the expanded test areas that it announced in early 2023.
“We could have launched broadly in late Q1, but we found enough improvement opportunities in these areas to shift a broad launch to Q2 to implement those changes,” the letter said. “As noted above, while this will shift some of the membership growth and revenue benefit from Q2 to Q3, we believe it will result in a better outcome for our members and our business. Longer term, paid sharing will ensure a bigger revenue base from which we can grow as we improve our service.”
Latin American countries had borne the brunt of the new sharing rules in the experiment’s early going, and the early indications dating back to last year were that it was not being received well. That could very well explain the decline of 450,000 customers in the Latin American region last quarter.
However, the same cannot be said for the United States and Canada. While the United States has not yet been impacted by Netflix’s new sharing rules, Canada was included in the latest round of the rule expansion in February. Despite nearly two months with the new rules in place, the UCAN region still added 100,000 customers in Q1 2023, something that Netflix execs were very happy with.
“As with Latin America, we see a cancel reaction in each market when we announce the news, which impacts near term member growth,” the streamer said. “But as borrowers start to activate their own accounts and existing members add ‘extra member’ accounts, we see increased acquisition and revenue. For example, in Canada, which we believe is a reliable predictor for the US, our paid membership base is now larger than prior to the launch of paid sharing and revenue growth has accelerated and is now growing faster than in the US.”
In January, The Streamable broke the story that Netflix had posted its plans for password sharing on its U.S. help page before quickly removing them and then claiming that the rules were posted on the domestic site in error.
However, the rules that had initially been revealed in the year’s first month, have been implemented in other countries, making it likely that they will be the same when efforts to curb-password sharing come to the U.S.
Netflix
Netflix is a subscription video streaming service that includes on-demand access to 3,000+ movies, 2,000+ TV Shows, and Netflix Originals like Stranger Things, Squid Game, The Crown, Tiger King, and Bridgerton. They are constantly adding new shows and movies. Some of their Academy Award-winning exclusives include Roma, Marriage Story, Mank, and Ma Rainey’s Black Bottom.