Report: Netflix to Gain Up to $3.5 Billion in U.S. with Password-Sharing Rules; Is Announcement Coming This Week?
Netflix users could only shake their heads and wonder aloud what the company was doing to itself by announcing plans to cut down on password sharing coming sometime in the first half of 2023. With the millions of users who have promised they’ll cancel their accounts if such measures are enacted, there can’t possibly be a financial benefit to such a move, can there?
The data would seem to indicate otherwise, however. New numbers from Macquarie Research, as reported by Fierce Video, show that by the end of 2024 Netflix stands to gain between $1.1 and $3.5 billion in th United States alone from putting an end to password sharing. This extra revenue will be generated both by current users paying extra monthly charges for other parties to use their account, and by users who were sharing a password deciding to opt for their own account instead.
Because account sharers are more likely to be price-sensitive, Macquarie thinks these efforts will drive users to the cheaper Basic with Ads plan that Netflix launched in November. That plan was slow to attract customers at first, but has seen more people sign up for it every month since it came to market. In all, Netflix estimates 100 million people around the world are sharing a password on its service, with 30 million of those residing in the U.S.
“All scenarios point to a higher incremental revenue to the existing ad-free revenue forecast with a significant upside potential,” said Macquarie analyst Tim Nollen. “Since the ad tier roll out has been quieter than expected, we think the implementation of the paid sharing strategy would lure more users to the ad tier and attract a wide swath of advertisers as the user base expands. We see this crackdown on password sharing as a catalyst to the growth of its ad tier roll-out.”
The company has been treading quite carefully with its plans to crack down on account sharing lately, after a big misstep in late January. At that time, The Streamable was the first to report that the company erroneously posted guidelines for sharing passwords currently in effect in several Latin American territories on its domestic Help Center page, a move that caused an uproar across the entertainment landscape. That forced Netflix into damage control mode, and — though it introduced new rules to combat password sharing in Canada, Portugal, Spain, and New Zealand in February — the streamer has not yet enacted those measures in the United States.
Netflix executives initially indicated that new rules to stop sharing of passwords were coming in the first quarter. But that block of time has now come and gone, with no concrete announcement of the company’s plans. That might change as soon as this week, however; Netflix’s first-quarter earnings results will be released on Tuesday, April 18, and many times companies use such reports to make consequential announcements about the future of their streaming platform.
That makes Tuesday’s quarterly earnings report must-see viewing for Netflix users. A survey suggesting that upwards of 35% of Netflix users could cancel if rules against sharing passwords go into effect might have given the company pause, but this financial data makes it difficult to believe that Netflix has simply forsaken its plans to crack down on password sharing.
Netflix
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