Netflix's paid password sharing rolling out more widely in Q1 2023

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by Ian Collen
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Netflix's paid password sharing rolling out more widely in Q1 2023

As part of its Q4 financial reports, Netflix has confirmed that it intends to broaden the reach of its existing “paid sharing” system to reduce the number of households that are sharing a single account.

Netflix puts the number of households sharing an account in excess of 100 million – which adds up to a lot of money, even at the Basic £6.99 a month, or the cheaper ad-supported £4.99 fee – and has already been trialling its low-cost “paid sharing” system, mostly in South America. This system lets users add additional households to an existing account for a few dollars more each month, with the wider rollout fee expected to be an extra $3 or $4 a month (and typically, given Netflix’ pricing system, that would be the same in UK pounds, although nothing has been confirmed as yet). So it's not an insubstantial amount, but still cheaper than a full subscription.

The company notes that “from our experience in Latin America, we expect some cancel reaction in each market where we roll out paid sharing”, which might impact its numbers a little, but it seems happy that the increased revenue from those who do sign up should more than counter those losses. The introduction of the system would presumably be accompanied with something of a clampdown on users sharing account details – which Netflix has been reasonably lax about in the past, but it has at least given some fair warning, as this has been talked about for many months now.

That said, Netflix doesn’t reference any specific regions that it will be introduced to in the short term, beyond stating that in Q1 of 2023 “we expect to start rolling out paid sharing more broadly”. So, whether this will include the wider US market or the UK and other European countries remains to be seen, but it’s a fair bet that it will be introduced sooner rather than later into some of its core markets. It is worth noting the report does point out that users will still be able to catch up on the latest films and show while travelling, “whether on a TV or mobile device”.

Netflix's paid password sharing rolling out more widely in Q1 2023
Presumably Netflix will look to 'hook' the wider rollout to coincide with some high-profile releases.

The news comes a few months after Netflix launched its new ad-supported tier, with the company admitting it still has work to do in this area (citing “better targeting and measurement” as one key factor) it still seems fairly happy with the pick-up, though, with “very little switching from other plans”. The new tier is not exactly primed to be a major cash-cow, with some reports suggesting it is struggling to gather any real traction, but it does look like Netflix is seeing gradual increases in revenue that it hopes will continue to build up over time.

As for the rest of the report, Netflix seems to have had a pretty decent Q4 2022 period overall. Revenue might have been down a little on the previous quarter ($7.8bn vs $7.9bn) but it does still mark nearly a 2% rise over last year, while its global paid membership numbers have jumped some 7 million in the last quarter alone to a little over 230 million (and up 7.66% year-on-year from 221.8 million). Quite how many of those new subscribers were in the ad-sharing tier remains to be seen.

Among the big hitters during the last few months of 2022 were Wednesday and the Harry & Meghan TV series, with Glass Onion an unsurprisingly popular film choice, along with a shout out to Troll for becoming its most popular non-English film (though the multiple BAFTA nominated All Quiet on the Western Front could well be on the way to surpassing it). As a side-note, along with its financials, Netflix also announced the former co-CEO Reed Hastings was moving on to the role of Executive Chairman, with the more hands-on duties being taken over by former COO Greg Peters, who joins Ted Sarandos as co-CEO of the company.

Netflix's paid password sharing rolling out more widely in Q1 2023

As for its paid sharing rollout, would existing Netflix users who share their account details with others be likely to accept the extra monthly fee? How big a difference could that additional monthly payment make – is maybe £2 acceptable but £4 pushing it too far, given that a second household could sign up for their own ad-supported subscription from £4.99? Or is it only fair that all households pay for their own Netflix use?

Clearly Netflix has done its research and figured out that those who do pay the extra, along with those secondary households that will subsequently choose to sign up for themselves, will sufficiently outweigh those who’d opt to walk away from the streaming service. So, let us know what side of the fence you might be on!

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SOURCE: Netflix (via Newsroom / Investor Relations)
IMAGES: Netflix

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