Last month, Netflix officially announced its ban on password sharing to customers in over 100 countries. The streaming service has hinted at a password sharing crackdown in previous earnings reports, but the company only officially announced the decision to its subscribers starting May 23 of this year via email. The message said, “Your Netflix account is for you and the people you live with — your household.” According to a Netflix spokesperson, the company will use “information such as IP addresses, device IDs, and account activity” to enforce this new rule.
In the weeks since the announcement, the company has faced criticism on social media for their decision. Ironically, during Twitter’s brand humanization craze in 2017, Netflix tweeted, “Love is sharing a password,” which has resurfaced online and has evoked ire from many consumers.
Now, customers can only use accounts from different households by adding a different profile on one of Netflix’s higher-priced plans for $8 each. These changes come a few months after the streaming service added a new, ad-supported tier in the final quarter of 2022.
Despite its unpopularity, this move by Netflix has brought increased subscriptions and comparably low cancellation rates. According to data platform Antenna, Netflix saw the highest level of daily sign ups in the days following its announcement in the four years that it has measured subscriber growth, surpassing even that of early COVID-19 lockdown subscriptions in 2020. On May 26 and 27, new subscriber sign-ups reached a daily number of almost 100,000, up 102% from the prior 60-day average.
This move comes after growing fears of saturation in the streaming market in recent months. With new streaming services seemingly emerging every few months, most recently DirecTV and Max, Netflix has been fighting to remain a dominant force. Though it is still the largest independent streaming service on the market—with $31.6 billion of revenue in 2022—their recent price hikes and the increased competition from other companies have created worries about company growth. Nonetheless, Netflix stock has been up 25% the last month and 129% in the past year.
Because of the success that Netflix’s decision has brought the company so far, it is likely that other platforms, such as Hulu and Disney+, will follow suit. This may significantly change the streaming market, as consumers who previously shared an account will have to make decisions as to which services they want to subscribe to.