Netflix’s crackdown on password sharing: Here’s what it means for you

Streaming giant Netflix has announced that it lost 200,000 subscribers in the first quarter of 2022, for the first time in a decade. As a result, it is being reported that the company may start charging a password-sharing fee and introduce a cheaper, ad-supported plan.

Expected to lose two million subscribers

It was predicted to gain 2.5 million paying customers, but the inverse occurred, stunning analysts. Netflix's share price has consequently tumbled.

To be fair, the company lost 700,000 subscribers in early March after its decision to suspend service in Russia after the country invaded Ukraine. Netflix claims that if it wasn’t for the war in Ukraine, it would actually have gained subscribers.

However, the company has warned that it is expected to lose two million subscribers in the second quarter. Some have questioned whether the loss is due to price rises. Netflix has already been increasing its monthly fees significantly around the world, with some UK subscribers now paying a third more than they were less than two years ago for the same service.

However, Netflix has attributed the loss to password sharing and increasing competition.

Fee for password sharing and ads

To increase subscribers and curb revenue loss, the company could be planning a global crackdown on password sharing. Netflix has suggested it would implement a number of new measures, such as charging users a fee for sharing their accounts outside of their household, and introducing a cheaper, advertising-supported plan.

Netflix co-founder Reed Hastings has long resisted supporting ads, but the company changed its mind on Tuesday. Hastings said in a recorded interview:

Those that have followed Netflix know that I’ve been against the complexity of advertising and that I’m a big fan of the simplicity of subscription. But as much as I’m a fan of that, I’m a bigger fan of consumer choice. And allowing consumers who would like to have a lower price and are advertising-tolerant get what they want makes a lot of sense.

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