Netflix’s long-awaited crackdown on password sharing is coming soon to the U.S., the streamer said on Tuesday.
Netflix originally planned to roll out “paid sharing” in the States during the first quarter of 2023. However, Netflix now says it’ll start rolling out the change — an update designed to convert account-sharers into paying users — a little later, on or before June 30.
This move is not limited to the U.S., either. “We are planning on a broad rollout, including in the US, in Q2,” the streamer said in its first-quarter 2023 earnings report. Alongside this announcement, Netflix also bid farewell to its 25-year-old mail-order DVD business. RIP.
Netflix’s quest to boost revenues by curbing password sharing kicked off earlier this year in Canada, New Zealand, Portugal and Spain. In these countries, Netflix requires paying users to set a “primary location” for their account. Going forward, if someone they don’t live with uses their account, Netflix alerts them to “buy an extra member.” Netflix says it will allow up to two extra members per account, and its fee per extra user varies by country. For example, it’s an additional CAD $7.99 in Canada and €3.99 in Portugal.
Speaking of revenue, Netflix fell short of analysts’ expectations for its first quarter of the year. The company said it brought in $8.16 billion during Q1 2023, while Wall Street anticipated a slightly higher figure — $8.18 billion. However, the firm reported higher-than-expected earnings of $2.88 per share in Q1; analysts had anticipated $2.86 per share.
Earlier in 2023, Netflix breezily summarized its paid-sharing update as a chance to clarify “confusion about when and how you can share Netflix,” but make no mistake, this is a crackdown. On Tuesday, Netflix played a similar tune, telling investors that the change “will result in a better outcome for both our members and our business.”
“We see a cancel reaction in each market when we announce the news, which impacts near term member growth,” Netflix said. “But as borrowers start to activate their own accounts and existing members add ‘extra member’ accounts, we see increased acquisition and revenue.”
Netflix ended regular trading with its stock price at $333.70 per share. After hours, the company’s individual share price slipped below $307, before rebounding to about $330 (as of 2:58p.m. PT).