Netflix Co-CEO Touts Password Sharing Crackdown for Driving Growth

Netflix’s co-CEO says that their password sharing crackdown drove subscriber growth. Yesterday, during a fourth-quarter earnings call, Greg Peters told the shareholders that the practice was bearing fruit for the brand. The CEO elaborated, “Our paid sharing work, and our ads work, creates a more effective engine to translate all [Netflix] value into revenue growth, and will support increased conversion of our addressable market in many years to come.” While it’s probably true that this drove subscribe growth, the practice is still negatively regarded by consumers. (By nature this would be self-evident as people booted off their family accounts had one choice, pay up or be left on a cliffhanger for their favorite programs.) Netflix

“We believe we’ve successfully addressed account sharing, ensuring that when people enjoy Netflix they pay for the service too,” a letter Netflix sent out to shareholders this week reads. “Features like Transfer Profile and Extra Member were much requested, and many millions of our members are now taking advantage of them.”

They continued, “At this stage, paid sharing is our normal course of business — creating a much bigger base from which we can grow and enabling us to more effectively penetrate the near term addressable market of ~500M connected TV households (excluding China and Russia), which should increase over time as broadband penetration rises.”

How Did The Password Crackdown Happen?

For those who are unaware, the password sharing now works in-household. Meaning that if the IP address for the “home” user doesn’t match another profile, that outside profile has to migrate their information to a new account or lose everything. A lot of bluster went up on social media, but there are people plunking down money for the privilege of holding onto their watchlists and favorites. Here’s what the company said last year.

Netflix told users, “We value our members and recognize that they have many entertainment choices. A Netflix account is intended for one household and members can choose from a range of plans with different features (see chart below). As always, we’ll refine these new features based on member feedback so that we continue to improve Netflix in the years ahead.”

“We’ve always made it easy for people who live together to share their Netflix account with features like profiles and multiple streams. While these have been hugely popular, they’ve also created confusion about when and how you can share Netflix. Today, over 100 million households are sharing accounts — impacting our ability to invest in great new TV and films,” they continued. “So over the last year, we’ve been exploring different approaches to address this issue in Latin America, and we’re now ready to roll them out more broadly in the coming months, starting today in Canada, New Zealand, Portugal and Spain. Our focus has been on giving  members greater control over who can access their account.”

Pushback On Password Sharing

Of courses, with any change this big, there are going to be some critics of the practice. (In this case a lot of them justified because of how much the Netflix brand leaned into the whole password sharing ethos for much of the 2000s and 2010s.)  Needless to say some have left and never looked back. But, there are some viewers that, while annoyed with the constant price hikes and staggered seasons to ensure subscriptions remain stable, simply grin and bear it to watch their shows.

Netflix CEO Ted Sarandos spoke publicly at the UBS Global Technology, Media & Telecom Conference last year. During that talk, he quickly identified that there would be pushback. “It feels a lot like the way you manage a price increase. … Consumers aren’t going to love it right out of the gate, but we need to show them why they should see value,” Sarandos said back then. 

How do you feel about password sharing? Let us know down in the comments!