Netflix to crack down on account sharing, will begin rollout in early 2023

CTV National News: Netflix loses 970K subscribers Netflix loses nearly one million subscribers in the past quarter — half of what they’d expected. Richard Madan reports.

The era of being able to share a Netflix account with multiple people, whether it be family members or ex-partners, will be coming to an end soon.

The streaming giant has signalled that, beginning in early 2023, it will launch a crackdown on those sharing their account with multiple people and implement charges for extra users outside of the primary account holder.

In its update to shareholders on Oct.18, Netflix said it will go ahead with plans to “monetize account sharing” and the primary account holders can create sub-accounts for “extra members” if they “want to pay for family and friends.”

The move follows a pilot of those charges in Peru, Chile and Costa Rica earlier this year, in which Netflix subscribers were charged 2,380 Chilean pesos ($3.36 CAD), 7.9 Peruvian sol ($2.72 CAD) and about 1,816 in Costa Rican Colones (around $4 CAD) for each additional member, with a maximum of two additional members per account.

Netflix is also introducing an account transfer service, where those who had a profile on someone else's account can move their profile and retain all their viewer data, but have to sign up for their own subscription.

In April 2022, Netflix had reported to shareholders that it was losing subscribers for the first time in 10 years, and pointed to account password sharing as part of the problem.

In its most recent Q3 earnings report, Netflix said it had reversed this trend and gained an additional 2.4 million net subscribers between July and September of this year.

The platform will also be launching a cheaper “ad-supported” subscription plan on Nov. 1 in Canada, along with Mexico, and then launching it more widely through the month. Those plans will be 20 to 40 per cent cheaper than current subscription prices, according to the Q3 report. In Canada, the new ad-supported tier will cost $5.99 per month.

Louis-Etienne Dubois, professor of creative industries management at Toronto Metropolitan University, told CTVNews.ca that Netflix planning to introduce fees for shared accounts is not a surprise.

“They’ve been hinting at this idea of cracking down on shared accounts or illegal users,” he said. “The feasibility of cracking down is much more complex to achieve, which probably explains why it took so long from the moment when they started to tease this announcement, and the moment they are going to enforce it.”

He said it’s also unclear how much Netflix will charge for shared accounts, and it wouldn’t be surprising if this change is delayed into 2023.

Markets have been looking to Netflix to make these changes in order to generate additional income, said Dubois.

In terms of how the public will react when the fees are introduced, Netflix has been testing options in secondary markets in South America, he said. Just because it worked there, doesn’t necessarily mean it will work globally, he explained.

Whether those using shared accounts will actually follow Netflix’s rules and pay for separate accounts remains to be seen, he said.

“So it’s going to be interesting to see how many of those profiles or users are actually not paying for the content right now, and how many of those will actually translate into paid subscriptions,” he said.

But implementing additional fees is not a sustainable, long-term growth strategy if Netflix wants to be competitive with other streaming services, said Dubois.

“Cracking down on users is not a growth strategy…it’s certainly not how Netflix is going to keep on growing and continue to compete against the other platforms out there,” he said.

In order to do that, the platform will have to continue to develop quality content, as other streaming services such as Disney+ have other revenue sources other than streaming, he said. Netflix, on the other hand, is a bit of a “one-trick pony,” said Dubois.

And its increase in subscribers this quarter is not something to get too excited about, he added.

“I wouldn’t celebrate just yet. We have to see if it’s something that’s sustainable,” he said.