Tech World

Netflix hints at password sharing crackdown, free ad-supported service as subscribers fall sharply

Netflix has hinted it will crackdown on households sharing passwords as it seeks to sign up new members following a sharp fall in subscribers.

It was also hit after it raised prices in some countries and left Russia. Pulling out of Russia in March in response to the Ukraine war had cost it 700,000 subscribers.

And another 600,000 people stopped using its service in the US and Canada after it put up prices in January.

The firm raised prices across all of its US plans, with a basic plan increasing from $9 to $10 per month, and a standard from $14 to $15.50.

Netflix warned shareholders another two million subscribers were likely to leave in the three months to July.

“Our revenue growth has slowed considerably,” the firm told shareholders on Tuesday after publishing its first quarter results.

“Our relatively high household penetration – when including the large number of households sharing accounts – combined with competition, is creating revenue growth headwinds.”

The streaming giant estimates more than 100 million households are breaking its rules by sharing passwords.

Boss Reed Hastings previously described the practice as “something you have to learn to live with”, adding that much of it is “legitimate” between family members. The firm also said account sharing had probably fuelled its growth by getting more people using Netflix.

But Mr Hastings said it was making it hard to attract new subscribers in some countries.

“When we were growing fast, it wasn’t a high priority to work on [account sharing]. And now we’re working super hard on it,” he told shareholders.

The firm said payment plans it is testing to curb password sharing in Latin America could be rolled out to other countries.

Since last month, account holders in Chile, Costa Rica and Peru must pay to add user profiles for people outside their household.

Netflix is supposedly looking at launching a free ad-supported service like its rivals Disney and HBO. This could open a significant new revenue stream for the company, which has so far shunned advertising.

Netflix’s biggest threat is intense competition from firms such as Amazon, Apple and Disney, which are pouring money into their online streaming services.