Netflix Wants "Consumer-Friendly" Ways to Crack Down on Password Sharing

Netflix held its Q3 earnings call this week and thanks to Stranger Things, the streaming platform looks to be back on track after an abysmal Q2. In the quarterly call that lasted nearly three-quarters of an hour, Netflix product chief Greg Peters unveiled his team continues monitoring the sharing of passwords among users. While the company has no active plans in place to crack down on its customers sharing log-in information, the executive admits he'd like to look into "consumer-friendly" ways to slow down the sharing of accounts.

"We continue to monitor it," Peters says of account users sharing their passwords. "We'll continue to look at the situation and we'll see those consumer-friendly ways to push on the edge of that but we've got no big plans at this point in time in terms of doing something different there."

The company ended up tallying less subscribers than it wanted — 6.77 million rather than the forecasted 7 million it anticipated — the platform still ended up with a record quarter. In it's letter to shareholders, Netflix justified the lower retention rates with a recent price hike, saying "with more revenue, we'll continue to invest to improve our service to further strengthen our value proposition."

In its Q3 earnings letter, Netflix also downplayed the upcoming launch of Disney+, saying while it's increased competition, the entire market is smaller compared to linear TV.

"The upcoming arrival of services like Disney+, Apple TV+, HBO Max, and Peacock is increased competition, but we are all small compared to linear TV," the company says in its Q3 shareholder letter. "While the new competitors have some great titles (especially catalog titles), none have the variety, diversity and quality of new original programming that we are producing around the world."

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Last quarter, the company lost subscribers for the first time ever, something it blamed on a shortage of original content.

“Our missed forecast was across all regions, but slightly more so in regions with price increases,” the company said in a Q2 earnings statement. "Believe competition was a factor since there wasn’t a material change in the competitive landscape during Q2, and competitive intensity and our penetration is varied across regions (while our over-forecast was in every region). Rather, we think Q2’s content slate drove less growth in paid net adds than we anticipated. Additionally, Q1 was so large for us (9.6m net adds), there may have been more pull-forward effect than we realized. In prior quarters with over-forecasts, we’ve found that the underlying long-term growth was not affected and staying focused on the fundamentals of our business served us well.”

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