The streamer’s password-sharing crackdown could have huge implications for the rest of the industry.
in April, Netflix said it was “pleased with the results” of its password-sharing crackdown in Canada, New Zealand, Portugal, and Spain while adding that its subscriber base in Canada is “now growing faster than in the US.
Netflix also doesn’t take into account the number of subscribers who will choose to lower their plans instead of cancel them altogether, something Rayburn says also poses a big problem for the company. Without password sharing, Netflix’s more expensive plans lose some of their value, as some users might only subscribe to these plans just because of the perk that lets multiple people watch Netflix at once from different devices — and across different households.
While Netflix’s $15.49 per month Standard plan lets you watch Netflix on two devices at a time, the $19.99 per month Premium plan allows up to four simultaneous viewers. The shift toward password sharing could mean that some users will opt to go for the $9.99 per month Basic plan instead of canceling their subscription, which allows users to watch Netflix on just one device at a time.
in its last earnings report. “The cancellations will hurt, but the downgrades will hurt as well because Netflix can’t make that up in advertising,” Rayburn explains.Whether or not paid sharing ends up hurting Netflix’s balance sheet, it could have huge implications for the entire streaming industry. Other companies, like Disney, Warner Bros. Discovery, and Paramount, are likely looking to see how consumers respond to Netflix’s password-sharing crackdown.
Aside from Netflix’s investors, I don’t think anyone is happy about this change — especially since Netflix is the only service that’s making users pay extra. It’s still far too early to tell how many subscribers the streamer will lose over the change, how many will pick a cheaper plan, or how many will actually purchase add-on accounts. But Netflix has to be careful how it implements the change.
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