Netflix may soon crack down on password sharing, executives hint

(NEXSTAR) – Netflix reported its first loss of subscribers in more than a decade in its quarterly earnings update released Tuesday. Executives have blamed password sharing, as well as increased competition from other streaming services, for the dip in subscriptions, and now they’re gearing up to turn the tides.

Between January and March this year, Netflix lost 200,000 users. While much of the decline can be blamed on the company’s decision to withdraw from Russia in protest of the war against Ukraine, it’s the biggest drop since Netflix unveiled plans in 2011 to begin charging separately for its streaming service, which had been bundled for free with its traditional DVD-by-mail service.

Now, a decade later, Netflix is hoping to counter something it has been letting happen: password sharing.

During an earnings call in 2016, Netflix CEO Reed Hastings said the company wouldn’t charge users for sharing their passwords. Instead, he called password sharing “something you have to learn to live with,” CNBC reports.

In a letter to shareholders Tuesday, Netflix executives reported that more than 100 million households are using a different household’s account. While discussing quarterly earnings, Hastings said password sharing, in addition to streaming competition, is believed to be causing “lower acquisition and lower growth.”

“This is a big opportunity as these households are already watching Netflix and enjoying our service,” the letter reads. Executives continued, outlining a move Netflix made earlier this year to begin testing new features to monetize password sharing by allowing members to add users to an account – with one including a small fee for the subscriber.

In March, Netflix said that while features like separate profiles and multiple streams available through its standard and premium plans have been “hugely popular,” they have led to “confusion about when and how Netflix can be shared.”

Two new features have been rolled out for members in Chile, Costa Rica, and Peru that will “enable members who share outside their household to do so easily and securely, while also paying a bit more.”

Users with Netflix’s standard or premium plans are able to add sub accounts for up to two people living outside their household for $2.99. The second feature, available for all three Netflix plans, allows users who share their account to transfer profile information either to a new account or an Extra Member sub account.

Netflix hasn’t yet said whether these features will be widely available anytime soon, but changes are expected within the next year or so.

The streaming service may also soon offer cheaper ad-supported plans for subscribers rattled by inflation, Reuters reports. Other services like Hulu and Peacock offer similar plans, and Disney+ is on track to debut a similar offering later this year.

Earlier this year, Netflix raised monthly subscription prices in the U.S. for all plans in order for the service to “continue to offer a wide variety of quality entertainment options.”

The Associated Press contributed to this report.