Netflix has said that it will start a crackdown on password sharing in India starting 20th July, along with some other countries such as Kenya, Indonesia and Croatia. Users will now be able to share passwords only with members of their household and not outside. Netflix announced the crackdown on password sharing in May owing to the massive revenue losses recorded last year.
The streaming giant said it has initiated the distribution of emails to customers in India sharing Netflix passwords outside their households. This basically means that those sharing a Netflix account with a permitted number of 5 family members will not be affected but those sharing the account outside of their household won’t be able to do so anymore.
The question is, how does Netflix know or determine the user’s household? It reportedly defines a household as a group of devices that connect to the internet and watch Netflix at the same primary place. Unless you manually adjust your household settings through your account, the company now will reportedly automatically determine your household using your IP address, device IDs, and account activity.
“Beginning today, we’ll start to address account sharing between households in almost all of our remaining countries. In these markets, we’re not offering an extra member option given that we’ve recently cut prices in a good number of these countries (for example, Indonesia, Croatia, Kenya, and India) and penetration is still relatively low in many of them so we have plenty of runway without creating additional complexity,” the company said, in a letter to its shareholders.
“Everyone living in that household can use Netflix wherever they are – at home, on the go, on holiday – and take advantage of new features like Transfer Profile and Manage Access and Devices”, Netflix said. Users in a ‘Netflix Household’, meaning ones who use the same internet connection, will be allowed to access the account in the base plan.
If members of that household are travelling and want to access Netflix on their devices, they will get a message saying that they are not in the household. In this case, the user can choose the option ‘I’m travelling’, which will require a authentication via registered phone number or email. After that, they will be able to use Netflix outside the household.
Technically, this method also can be used by people who are sharing passwords, but this will require frequent verification of the devices, which may not be convenient in the long run. The user who is using someone else’s account will need to contact the owner of the user regularly, which some people may not like.
In May last year, the streaming giant introduced paid sharing across countries adding nearly six million paid subscribers to the platform till June. Netflix now has more than 238 million subscribers globally. Paid sharing allows users to add extra viewers to their existing accounts for an additional amount. This has helped the company convert non-paying users thereby increasing its consumer base.
The company reportedly said its revenue in the said countries is now higher than before its launch. “Sign ups are already exceeding cancellations,” it stated.
Netflix’s chief financial officer (CFO) Spencer Neumann said, “Most of our revenue growth this year is from growth in volume from new paid memberships and that’s largely driven by our paid sharing rollout.”
While Netflix has introduced paid sharing in the majority of countries, it will not be offering the option in India owing to the recent price cuts it announced, it said in the letter to shareholders.
But the paid-sharing move has reportedly yielded less revenue for the quarter than expected by Wall Street analysts. Netflix declared about $8.19 billion in revenue for the quarter as compared to the $8.3 billion projection by Wall Street. It also posted a net income of $1.49 billion, up 3% from the same period in 2022.
“While we’ve made steady progress this year, we have more work to do to reaccelerate our growth,” the company reportedly said in a letter to investors. Netflix ended the quarter with a profit of $1.5 billion, as per an earnings release, and added 5.9 million paid members in the second quarter. Last year this time, it had lost nearly one million subscribers.
In India, it reportedly reduced the prices of services by 20 to 60 percent in December 2021 which helped the company grow engagement by nearly 30 percent year after year. Netflix said that revenue growth increased to 24 percent in 2022 as against 19 percent in 2021.
The streaming giant has also removed its basic ad-free plan in the US and UK which allowed users to watch shows and movies without commercial ads. This move too is aimed at drawing more subscribers. Users already subscribed to the plan won’t be affected until they change the plan or cancel their account.
The cheapest ad-free plan now costs $15.49 a month in US(£10.99) as against the previous $9.99-a-month basic plan. “Our starting prices of $6.99 in the US and £4.99 in the U.K. [for Standard With Ads] are lower than the competition and provide great value to consumers given the breadth and quality of our catalog,” a Netflix spokesperson reportedly stated.
In India, Netflix offers four plans, Mobile, Basic, Standard and Premium. The ₹149 a month Mobile plan can be used to consume SD quality content only on mobile devices like phones or tablets. The Basic plan at ₹199 a month enables watching HD quality content on mobile devices, TV or computer, and only one user can use it at a time. The Standard plan at ₹499 a month enables watching Full HD quality content on mobile devices, TV or computer, and two users can use it at a time. The Premium plan which costs ₹649 a month offers Ultra HD content on all devices and can be used on up to 6 devices.
