Ad-Supported Tier May Be Less Likely for Netflix, Password Crackdown Announced

Illegally Shared Accounts

For years, streaming giant Netflix (NFLX) has more or less looked the other way when it came to people sharing accounts. Now, the company has announced a plan aimed at cracking down on the practice by charging users when accounts are shared outside of their household.

The new feature will be tested in Costa Rica, Chile, and Peru over the coming weeks. For around $2.99 each month users can set up two “sub” accounts for people they don’t live with. The move follows January’s price hike for monthly subscriptions, Netflix’s first such increase since 2020.

Struggles Recently

A week from today Netflix will release season two of its mega-popular show Bridgerton, and executives are likely hoping it will be a shot in the company’s arm. Share prices have plummeted since the stock’s peak in mid-November, and the platform’s subscriber base grew by just 9% last year after averaging 24% during the previous four years.

Competition is fierce within the streaming sector, with Netflix increasingly spending more on content in order to attract and retain customers. The company isn’t alone in being concerned about password sharing either. Both HBO Max (T) and Disney+ (DIS) routinely email subscribers when they detect someone outside their household has accessed the account.

Ad Tier and Binging

As Netflix’s rate of subscriber growth has slowed and competition has increased, people have wondered if an ad-supported tier might emerge. While executives have said they’re open to the idea, reports indicate it’s not likely anytime soon. Other streaming platforms have already gone that route, such as Paramount+ (PARA), Peacock (CMCSA), and HBO Max.

Streaming platforms sometimes release content in a staggered fashion, similar to the way traditional TV networks aired weekly episodes. Netflix doesn’t seem keen on that strategy either, saying their customers have expressed a preference to “binge watch” as much as they want in one sitting. While the streaming industry remains focused on subscriber growth and “churn,” or people who sign up and then cancel, password sharing is a problem Netflix seems particularly eager to handle.

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