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Netflix Hits Pause on Account-Sharing Crackdown
MAY 19, 2023  (4:04 PM)

Netflix Hits Pause on Account-Sharing Crackdown

Netflix has been pushing the boundaries of providing users with an expansive library of entertainment options.

The company recently unveiled a crackdown on account sharing to increase its revenue stream. However, this move has seen pushback from customers, resulting in a decline in paid subscriptions to Netflix.

The streaming giant tested the stricter rules in countries including Canada and Spain, resulting in a "cancel reaction" from customers and causing paid subscriptions to drop significantly.

This led Netflix to delay the wider rollout of account sharing from the first quarter to the second. Co-CEO Ted Sarandos said this could cause engagement with Netflix's service to shrink "modestly" but expects it to recover over time.

In an effort to increase revenues, Netflix introduced a "paid sharing" service that allows customers to share their accounts with people outside their households for an extra fee.

It is estimated that around 100 million households are currently taking advantage of this option worldwide, and Morgan Stanley estimates that 20% to 30% could potentially be converted into paying subscribers.

Despite delaying its account-sharing rollout, Netflix still reported solid financial numbers for its first quarter. The company saw 1.7 million net subscribers added globally and reported $8.16 billion in revenue - although this was lower than expected by Wall Street analysts who had predicted $847 billion in revenue.

Netflix's attempt at cracking down on account sharing to increase revenue is undoubtedly understandable. However, it remains to be seen if this strategy is successful or not going forward, as many users have expressed their displeasure with the new rules.

Source: NY Post