ExplainedWhy Netflix is cracking down on password sharing

By India Today Business DeskGlobal streaming giant Netflix has informed its users in India that it is taking measures to stop password sharing and that their account is only for them and their family members.

Netflix expanded its crackdown on password sharing in May to tackle sluggish revenue growth and stagnation in its subscriber base.

In the past, a single Netflix account could be used by multiple people, but the streaming giant has introduced strict measures to curb password sharing to boost subscribers and revenue per user.

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The strategy behind the move

Netflix’s update on password sharing should not come as a surprise to users, as the streaming giant has been looking for ways to make money amid intensified competition in the content streaming business.

Though it is the biggest content streaming platform in the world, it has struggled to grow after a period of rapid growth during the Covid-19 pandemic.

For multiple quarters, Netflix has been struggling with stagnation in subscriber growth, which has had a serious impact on its revenue as well.

On Wednesday, the streaming giant reported weaker-than-expected second-quarter results, following which its shares tumbled nearly 9 per cent. The company’s quarterly revenue climbed 2.7 per cent from a year earlier to $8.2 billion, lower than analyst forecasts of $8.3 billion.

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Meanwhile, the company estimated third-quarter revenue would hit $8.5 billion, which is also lower than Wall Street’s expectations. The sluggish revenue growth and dull future outlook are two major reasons why Netflix is looking to explore drastic options.

Has the crackdown worked?

While Netflix’s revenue forecast for the next quarter remains weak, the crackdown on password sharing seems to be working.

The company added 5.9 million subscribers in the second quarter, indicating that more people are now signing up to access their services.

The addition of nearly six million subscribers is far more than the 1.9 million expected by analysts. Netflix had a total of 238.4 million subscribers worldwide as of June’s end.

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“While we’ve made steady progress this year, we have more work to do to reaccelerate our growth,” the company said in its quarterly letter to shareholders. Netflix expects revenue growth to accelerate in the second half of the year, with a focus on content, and improvement in monetization, among other measures.

Netflix’s crackdown on password sharing In May, Netflix expanded its crackdown on users sharing passwords with people beyond their immediate families as part of a move to boost revenue.

The company took the decision after finding out that more than 100 million households were sharing accounts. In its second-quarter earnings release, the company made it clear that the password-sharing policy would expand to all countries where it operates.