If you're using someone else's Netflix account, this news is for you: Netflix wants to monetize sharing, and it wants to do it soon.
In a letter to shareholders as part of Q1 revenue results, Netflix for the first time put a figure on the total number of households using another household's account, saying, in essence, that 100 million-plus households are currently binging Bridgerton using someone else's credentials and not paying Netflix for the service.
The company currently has over 221M paying subscribers globally, but that number is virtually unchanged from the last quarter. There are, by Netflix's count roughly 33% more people who could also be paying to watch the next Squid Game.
It's no secret that the popular streaming service now cares about people sharing accounts. Earlier this year, it unveiled a pilot program where it would add a $2.99 surcharge to accounts that want to share their credentials outside the household. For now, the test in contained in Chile, Costa Rica, and Peru.
However, based on the wording of the letter, it's now clear that Netflix may move swiftly to expand the program. In the letter, Netflix explains, “So while we won’t be able to monetize all of it right now, we believe it’s a large short- to mid-term opportunity. As we work to monetize sharing, growth in ARM, revenue and viewing will become more important indicators of our success than membership growth.”
Netflix's growth struggles are actually spread across a number of factors, which Netflix notes it can't control, like the how many people buy connected or smart TVs, people switching (or not) from cable and broadcast to on-demand services (like Netflix), and rising data costs. It's worth noting that Netflix, which does not control the cost of broadband data but does manage its own service pricing, has been raising rates in recent years, including a sizeable bump in January.
Despite the sizeable number of people sharing Netflix (100M globally and 30M in US and Canada), Netflix notes that the number of sharers has remained relatively static in recent years. Still, this makes Netflix no less anxious to leverage that potential revenue.
It's also clear that as the world returns to life outside our COVID bubbles, Netflix has experienced a sort of whiplash growth and decline. It was rapid during 2020 but pulled back significantly in 2021 and the slowdown has only accelerated due to the factors Netflix can't control and those tens of millions of unpaying account sharers.
What does this mean for you?
If you're one of the millions of people sharing your parent's accounts, maybe a friend's or distant relatives, Netflix is putting you on notice. There probably won't be a global account sharing surcharge today, tomorrow, or next week, but it's surely coming. One day, you might get a call from a friend, “Hey, about my Netflix account…”
- If you want to understand why Netflix’s decisions is just the start of a slippery account-sharing slope, read this.