Millions are still sharing their Netflix passwords beyond their household. That won't be free for much longer
Sharing Netflix accounts beyond your household is could be about to come to an end as the streaming giant says it will be rolling out paid sharing options to more regions soon.
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Netflix said in its Q4 2022 earnings report that it will be rolling out paid sharing "more broadly later in Q1 '23" following its trial in parts of South America. The company expects some "cancel reaction" in each market as it rolls out paid sharing, but also expects subscriptions to pick up in the second quarter, resulting in better overall revenues -- the company's main metric right now.
"Today's widespread account sharing (100M+ households) undermines our long-term ability to invest in and improve Netflix, as well as build our business. While our terms of use limit use of Netflix to a household, we recognize this is a change for members who share their account more broadly," Netflix said.
New features to accompany paid sharing include members being able to review which devices are using their account. Subscribers and borrowers can also transfer a profile to a new account, and subscribers can opt to pay for people living outside a household. In the end, someone has to pay, be it the household or the borrower.
"As we roll out paid sharing, members in many countries will also have the option to pay extra if they want to share Netflix with people they don't live with. As is the case today, all members will be able to watch while traveling, whether on a TV or mobile device."
In July, Netflix ditched its "add a Home" feature in Argentina, the Dominican Republic, El Salvador, Guatemala, and Honduras based on user feedback. In place of that, it allowed people not living in a subscriber's household to transfer their Netflix profile to their own account and keep all their recommendations and preferences when they start paying. Also, it gave subscribers the option to pay for others by creating sub-accounts via an "extra member" option.
Netflix hasn't revealed pricing for paid sharing or the timing of the rollout for different countries. In Costa Rica, the cost was $2.99 for an extra member.
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Also, Netflix co-founder Reed Hastings has stepped down as co-CEO after 25 years leading the company. He is now executive chairman. Netflix's new leaders are current co-CEO Ted Sarandos and Greg Peters, previously Netflix's chief operating officer.
It's other new revenue stream, advertising, kicked off in November with ad-tech partner Microsoft. Netflix said its ad-sponsored subscriptions for $6.99 in the US had attracted incremental subscriptions. It hasn't seen subscribers on premium plans moving down to the ad option, which has fewer features, such as the inability to download content to watch offline. Netflix said the impact of ads on revenues will be modest in 2023.
The company's Q4 2022 paid subscriptions grew 4% year on year to 230.75 million, with revenues growing 1.9% year on year to $7.85 billion. The company added 7.6 million new subscribers worldwide, gaining 909,000 in the US. But average revenue per member declined by 2% year on year. Netflix missed its earnings per share (EPS) by a wide margin, ending up at 12 cents versus the 36 cents EPS it had forecast. EPS was down from $1.33 in Q4 2021.