Does a dip in Netflix subscribers mean a crackdown on password sharing is imminent?
ITV News Arts Editor Nina Nannar reports on Netflix's proposal to crackdown on password sharing as subscriber numbers drop
Netflix is considering a crackdown on password sharing between households and may begin to introduce advertising as part of cheaper plans after it saw an unexpectedly sharp drop in subscribers.
Why is this and what would this mean for UK subscribers of the platform?
Why might Netflix get tougher on password-sharing?
The streaming service hopes the changes will help the company recover its momentum after its customer base fell by 200,000 subscribers in the first three months of the year - the first drop it has seen in 10 years.
Netflix said more than 100 million global households use a shared password, with more than 30 million of those in the US and Canada.
In a quarterly shareholder letter, Netflix said the large number of households sharing accounts has not changed much over the years but that "combined with competition" it was "harder to grow membership in many markets — an issue that was obscured by our Covid growth”.
Why there has been a reduction in subscribers?
The platform - home to hit shows including Squid Games and The Crown - boomed under Covid lockdowns as people stayed at home, but growth has slowed as the world returned to normal. Its total number of paying subscribers increased by just 18 million over the course of 2021 compared to 37 million in 2020, according to filings on the US Securities and Exchange Commission (SEC).
It has also seen rivals such as Apple and Walt Disney begin to chip away at its audience with their own streaming services.
The drop also stemmed in part from Netflix’s decision to withdraw from Russia in protest of the war against Ukraine, resulting in a loss of 700,000 subscribers. Netflix projected a loss of another two million subscribers over the next three months.
For more insights from big showbiz names, listen to the ITV News Unscripted podcast
Netflix shares plunged by more than 25% in extended trading at the news of the fall in growth, wiping off $40 billion of its stock market value. Since it warned in January of weak subscriber growth, the company has lost nearly half of its value.
Could Netflix introduce advertising?
Netflix is said to be contemplating offering a lower-priced version of the service with advertising, similar to plans offered by HBO Max and Disney+, despite the CEO's misgivings.
"Those who have followed Netflix know that I've been against the complexity of advertising, and a big fan of the simplicity of subscription," said Netflix CEO Reed Hastings.
Has Netflix charged for password-sharing before?
The company announced in March that it was planning to charge extra for accounts shared between households and was trialling its “new features” in Chile, Costa Rica and Peru.