Netflix co-CEO Ted Sarandos told the UBS Global Media and Communications Conference today that Netflix is "completely satisfied" with the progress of a crackdown on password sharing it launched in the United States earlier this year. In 2022, the streaming company began removing password sharing first in several countries in Latin America, requiring those who wanted to share their subscriptions with people outside of their immediate family to pay an additional fee.
Password sharing restrictions were subsequently expanded to Canada, New Zealand, and some European countries in February 2023, and to the United States, United Kingdom, and other countries in May 2023. The tiered rollout gives Netflix time to gauge user reaction. "It's good to take your time," Sarandos said at today's conference. "That's why we didn't do it all in one fell swoop."
Netflix allowed password sharing to flourish for more than a decade before deciding to crack down. The reason for this change is that in the first quarter of 2022, Netflix lost its number of users for the first time in 10 years and its revenue also dropped sharply. In an effort to increase revenue, Netflix stopped password sharing, raised prices, and launched lower-priced, ad-supported plans.
According to Netflix, an estimated 222 million paying households are shared with an additional 100 million unmonetized households.
Netflix said it has seen strong user growth in countries that restrict password sharing after restricting password sharing. In the second quarter of 2023, Netflix added 6 million new users, including more than 1 million in the United States and Canada. Revenue grew in every region where paid sharing was launched, with sign-ups eventually outpacing cancellations. In the third quarter of 2023, Netflix added 8.8 million new users, up from 2.4 million in the third quarter of 2022, and revenue also increased by $64 million.
Netflix users can now only share accounts with people who live in the same household, and Netflix restricts access based on IP and other location data. "A Netflix account can only be shared between people who live in the same household. People who are not in your household will need to use their own account to watch Netflix," the Netflix website reads.
Along with eliminating password sharing, Netflix also increased its prices in the United States in October. The basic ad-free plan is now $11.99 per month (a $2 increase), while the premium plan is $22.99 per month (a $3 increase). Netflix hasn't changed the price of its $6.99 ad-supported tier or $15.49/month standard plan.