Netflix says password-sharing crackdown proved effective, boosted subscriber retention

Netflix has provided an update on its efforts to curb password-sharing among users, stating that the crackdown has been effective in several countries. The initiative has now been extended to over 100 countries, accounting for more than 80 per cent of Netflix's revenue base. The company started targeting password-sharing in the US in May, following earlier trials in several international markets since February. Despite the action taken, Netflix has reported a minimal number of account cancellations as a result of this measure.

The majority of users appear to be converting their borrowed accounts into full-paying memberships or opting for the option to add an extra member to their account for a fee.

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Under the new policy, Netflix accounts are restricted to one household, with the account holder having the choice to add a member outside of their home at an additional cost. The company is now set to address account sharing in almost all remaining countries, including India. However, in these countries, Netflix will not offer the option to pay for an extra member, as per The Hollywood Reporter, as it has recently lowered subscription prices there.

Also Read:Netflix adds nearly 6mn new subscribers amid widening password-sharing crackdown

What led to Netflix ending password-sharing?

The streaming giant suffered losses in April 2022 when it lost a million subscribers. The company reported that about 200,000 subscribers said goodbye to their subscriptions, which was the first time in more than a decade that the company lost users, instead of gaining them.

The execs had actually expected to gain 2.5 million subscribers. Then between April and July, the service lost almost a million more subscribers. But it had expected an even bigger drop, and the losses were somewhat curtailed by Stranger Things 4, which debuted in two volumes in 2022.

Behind Netflix's enduringissues

Netflix mainly relies on its original content to garner and retain its subscriber base. But there are high costs associated with producing originals and acquiring legacy content from other studios. The company has also had a heavy investment in international markets in the last few years.

Also, it has a subscription-based model, and it is dependent on constant subscriber growth to generate revenue. If the company's subscriber growth slows down or if it experiences a decline in subscriber retention, as it did, it severely impacts its financial performance. The streaming market is becoming more competitive and subscriber retention is becoming more challenging for Netflix.

Also Read:Explained | Why Netflix might survive Hollywood strikes of actors, writers

As of now, the company has bounced back, financially speaking.

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