The new year is bringing big changes to your Netflix account. If you’re one of those people who shares a login with your family, you might want to start exploring alternatives. According to a recent report from the Wall Street Journal, Netflix’s crackdown on password sharing will go into full effect in 2023.
Netflix has foretold its new policy since March, when it started running tests in three Latin American countries. Each subscriber who participated in the test could add up to two other people to their account. The price of that service varied by country, but it generally hovered around $3 per added user.
The WSJ report suggests that Netflix password sharing will also cost $3-a-pop in the U.S. Millions of subscribers will be affected; a 2018 study found that 42% of Gen Z respondents and 35% of Millennials share their streaming service passwords. One analysis estimated that Netflix’s pricier policy could generate $721 million of revenue in 2023.
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The streamer is anticipating that subscribers will bristle at the new Netflix order. “Make no mistake, I don’t think consumers are going to love it right out of the gate,” Netflix co-CEO Ted Sarandos told investors in December 2022.
Those criticisms are unavoidable, but financial incentives have compelled Netflix to initiate its crackdown. The company’s other co-CEO, Reed Hastings, admitted that pandemic-era growth obscured the severity of the password-sharing problem. The magnitude of that issue became clear after Netflix released its Q1 2022 earnings, which did not meet expectations.
The beginning of the pay-to-share era could also be a boon for Netflix’s newest subscription. The streamer launched an ad-supported option on November 3. In spite of that tier’s reduced price ($6.99 per month), it has struggled to catch on. After falling short of inventory targets during its first six weeks as an ad-supported business, Netflix has paid back buyers to make up for missing impressions.
Once the era of free password sharing comes to an end, millions of people will be in the market for Netflix subscriptions. Those bargain hunters are the sort of people who might find a $6.99-per-month subscription appealing. Perhaps, in the new year, Netflix will be able to build the ad inventory its agency partners are looking for.