Netflix plans to crack down on password sharing beginning in 2023. After giving users the ability to transfer their profiles to new accounts, the streamer says it will start letting subscribers create sub-accounts starting next year in line with its plans to “monetize account sharing” more widely.
This is part of Netflix’s earning results today, which says the company added 2.4 million subscribers this quarter as the streaming service looks to launch its ad-supported tier next month and clamp down on password sharing. The streamer says it has grown by 104,000 paid subscribers in the US and Canada over the last three months, up from 73,000 in the same period last year, and says it remains committed to the “bingeable release model.”
Earlier this year, Netflix reported losing subscribers for the first time in over 10 years, with the company’s subscriber count dipping by another 1.3 million in the US and Canada and 1 million worldwide last quarter. To remedy this, Netflix has also been slowly nudging subscribers away from password sharing. The company conducted tests that prompted users in Chile, Costa Rica, and Peru to pay extra for a sub-account if Netflix detected someone was using the owner’s subscription outside of their household.
It also tried out a way for users in Argentina, El Salvador, Guatemala, Honduras, and the Dominican Republic to buy additional “homes” for accounts located outside of the subscriber’s primary household. More recently, Netflix widely introduced a Profile Transfer tool that lets users easily transfer their personalized recommendations, viewing history, My List, saved games, and other settings to a new account after testing it in other countries. Last month, a report from Rest of World revealed frustration from users subject to the tests in Latin America.
The streaming giant announced last week that it’s rolling out its $6.99 / month ad-supported tier, called Basic, on November 3rd in the US, Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico, Spain, and the UK. Netflix is partnering with Microsoft to serve ads to users and says they’ll last anywhere from 15 to 30 seconds. This new tier doesn’t give subscribers access to Netflix’s whole library due to licensing restrictions, however. Basic subscribers also can’t download anything on their devices and can only view content in HD. The company’s ad-supported tier notably arrives before Disney Plus’, which is set to go live on December 8th.
As competitors like Disney, Warner Bros. Discovery, Paramount, and NBC build up their content libraries and base of paying subscribers, Netflix remains confident its business model will outpace its competitors. “It’s hard to build a large and profitable streaming business — our best estimate is that all of these competitors are losing money on streaming, with aggregate annual direct operating losses this year alone that could be well in excess of $10 billion, compared with our +$5-$6 billion of annual operating profit.”
Disclosure: The Verge recently produced a series with Netflix.