Netflix is launching a crackdown on freeloaders as it mulls extra charges for account sharing.
The streaming giant hinted it may bring in more fees for customers looking to set up additional accounts.
The firm said during its quarterly earnings call on Tuesday it was considering ‘monetizing account sharing’ from early next year.
The move appears to be a desperate attempt to quash users sharing passwords and account details with friends and family instead of paying their own subscription.
Netflix trialed the system in South America earlier this year where account holders were charged an extra $3-4 per second home. But a spokesman said it had decided to ‘sunset’ the idea.
It comes after the streaming giant saw a glimmer of hope for the future yesterday as it clawed back 2.4million subscribers and shares rose 13 percent.
But it only marked the start of the recovery as stocks remain over 50 percent down since the year started.
The streaming giant hinted it may bring in more fees for customers looking to set up additional accounts
The firm said during its quarterly earnings call on Tuesday it was considering ‘monetizing account sharing’ from early next year
During its quarterly earnings call on Tuesday, Netflix said it may introduce a fee for account sharing.
The measure was first floated back in April after a dreadful earnings report, according to the New York Post, and comes after Netflix tried to find ways to keep users from sharing accounts without driving them away from the platform.
Netflix characterized the new idea as a ‘thoughtful’ way to solve the account sharing problem which has plagued them for years.
‘We’ve landed on a thoughtful approach to monetize account sharing and we’ll begin rolling this out more broadly starting in early 2023,’ Netflix said in its announcement.
‘After listening to consumer feedback, we are going to offer the ability for sharers to manage their devices more easily and to create sub-accounts, if they want to pay for family or friends.’
Though Netflix has always officially required that users do not share their passwords with other users, previously little has been done to enforce the rule.
Reports show that account sharing costs Netflix about $6billion per year, according to the Post.
Over the summer Netflix experimented with charging fees for additional accounts, testing the idea in Latin America where password sharing was a particularly rampant problem.
The wide-scale rollout of the move now has the potential to make or break Netflix, which has been struggling to find a way to shore up its plummeting profits while maintaining its subscription based revenue platform.
Analysts said Netflix is doing everything it can to avoid subjecting users to advertisements or selling their data, but many predict it is only a matter of time before the firm is forced to turn to that.
Netflix’s share price has plummeted since the start of the year following the announcement of its 200k subscriber loss in April. By the end of Q2 another 970,000 had fled the platform.
Netflix has previously blamed widespread abuse of password sharing by users as one of the primary causes of its flagging subscription numbers, saying that over 100million households are taking advantage of accounts being paid for by others.
This week Netflix also introduced a feature called called Profile Transfer, which lets users easily migrate their profile to a new account.
It means users’ favorites, recommendations and viewing history are salvaged when profile owners start a Netflix account of their own.
Netflix says the tool lets profile holders easily transfer their profile from the account of someone they’re no longer in contact with – such as an ex-boyfriend.
But it also encourages people with profiles on Netflix to start up – and pay for – their own account rather than ‘freeloading’ off someone else’s.
Netflix said the ‘much requested’ feature is now rolling out to all users around the world, and that an email will be sent as soon as it’s available for each account.
The platform is also rolling out an ad-based subscription option beginning in November which will cost $6.99 per month.
Netflix originally allowed for multiple profiles on an account so that multiple members of a household, such as children, can enjoy content without having to start their own Netflix account and pay the monthly fee.
Netflix announced on Tuesday that it gained 2.4million subscribers between July 1 and September 30. The streaming giant released the last few episodes of the fourth season of Stranger Things during that time
The announcement comes after Dahmer-Monster: The Jeffrey Dahmer Story, became one of Netflix’s most-watched series of all time
But there was nothing to stop that account from being used across multiple households, even though the Netflix terms of service say that users of an account must live in the same household.
In effect, it meant that five people living under five different addresses can have their own profile under one account.
That deprives Netflix from a potential revenue source, and ‘undermines our long term ability to invest in and improve our service’, Netflix said.
Yesterday Netflix made an unexpected comeback in the third quarter of this year, following the success of shows like Stranger Things and Dahmer.
Executives at the streaming giant announced on Tuesday the platform added 2.4million subscribers between July 1 and September 30 after two consecutive quarters losing subscribers. That is more than double what Wall Street expected.
Netflix also topped Wall Street projections with revenue of $7.9billion — up 6 percent from one year earlier.
Those earnings among to $3.10 per share, after the companies share prices fell nearly 60 percent over the year.
But shares have now jumped 14 percent in after-hours trading, boosted in part by the streaming service’s forecast that it would pick up another 4.5million customers in the fourth quarter.
Netflix, though, projects revenue to once again fall in the fourth quarter to $7.8 billion due as inflation continues to rise.
The gains come after Netflix released the final episodes of the fourth-season of its sci-fi hit Stranger Things, as well as its new serial-killer series Dahmer-Monster: The Jeffrey Dahmer Story, which became one of Netflix’s most-watched series of all time.
‘Netflix’s impressive numbers show the company’s growth story is far from over,’ said Investing.com analyst Haris Anwar, as Wall Street investors focus on whether streaming platforms can continue making subscriber gains amid fears of a recession.