Netflix announced in its Q1 2023 earnings report that it will be expanding its “paid sharing” plan, which targets password sharing, to more countries in the second quarter, including the United States. The company has already implemented password sharing restrictions in Canada, New Zealand, Spain, and Portugal, and claims to be “pleased with the results” so far. Initially, Netflix had planned to start tackling password sharing in the U.S. in the first quarter of the year, but decided to delay the rollout after learning from its tests and discovering opportunities to improve the user experience. While the company expects a “cancel reaction” in each market where paid sharing is introduced, it anticipates increased revenue in the long run as users activate their own Netflix accounts or add “extra member” accounts.
Netflix found that the introduction of paid sharing in Canada resulted in an expanded membership base and accelerated revenue growth, which has given the company confidence to extend the initiative to the United States. With the implementation of paid sharing rules in the U.S., multi-household account use will no longer be allowed. Subscribers who currently share an account with people outside their household will need to pay for an additional member. In Canada, the cost for an extra member is around $6. Up to two additional people can be added to an existing Netflix Standard or Premium plan, with each extra member receiving a profile, personalized recommendations, login, and password.
Users can also undergo a profile transfer process, allowing those who currently have free access to an account to create their own separate, paid account. Netflix will require users to establish a primary location, and subscribers not at this location will be unable to use the service through that account. However, allowances will be made for travel or second homes, with users needing to open the Netflix app at the primary location once a month. Netflix estimates that over 100 million households share accounts, which hinders the company’s ability to “invest in and improve Netflix” for paying members.