Netflix has long reigned as one of the most popular streaming platforms. However, after facing increased competition from other services including Disney+ and Apple TV+, and seeing a reduced number of memberships in April 2022 for the first time in more than a decade, they decided to take a new course of action. As a result, the password crackdown is a controversial move which has been conceived by the streaming giant to reduce the amount of password sharing. The reason for their crackdown is simple; it has been announced by the platform that over 100 million households have cut subscription costs by sharing accounts, with Los Angeles Times calculating that streamers and other similar paid-for providers lost $9.1 billion in revenue in 2019. But what will the crackdown actually entail? What does this mean for the individual consumer?
Netflix Introduced Additional Sharing Fees
Netflix subscribers can still share their account with friends or family outside their immediate households, but at an extra cost. With a primary location set up to establish who lives at the account holder’s home, anyone outside who wants to use the account will cost the member an additional sharing fee on top of their existing subscription plan. The additional cost is $7.99 in the U.S. or £4.99 in the UK.
How Many Users Will Be Lost Due to the Sharing Fees?
The results of the roll-out so far have varied. In Spain, where an earlier trial of 5.99€ was implemented, users were not happy with the change, reflected by the loss of over a million subscribers, according to Kantar. Nevertheless, Netflix is still confident that overall, the change will result in the acquisition of more members. They can attest this to the fact that the implementation was more successful in Canada than it was in Spain, with the membership number reportedly increasing since the fee was introduced.
The High Cost to the Individual
With the standard plan increasing to $15.49 in the US, an additional cost of $7.99 to share outside the household makes the overall cost comparatively steep compared to how affordable it used to be. There is an alternative, more affordable option of “Basic With Ads,” where ads will be shown to the viewer whilst watching many of the TV shows and movies on the platform, either before or during viewing. At $6.99 a month, this is clearly the most attainable option. Users will therefore have to decide whether it is worth forgoing ad-free content in exchange for a cheaper fee.
The outcome of the changes to password sharing may dictate whether other streamers like Disney+ or Amazon Prime Video follow suit, with rumors that Disney+ may have begun to research whether it would be a good course of action. If there is a domino effect, the damage caused by Netflix’s password-sharing crackdown may be far wider-reaching than anyone could have foreseen, with streaming sites never looking the same again.
In their entirety, the changes we are seeing to the way streaming services operate may result in too significant a cost to the individual. Pairing this with global inflation which is adversely affecting many, in the future, users may choose to unsubscribe from Netflix altogether.
