Is Netflix’s Password Sharing Crackdown Justified?

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As news broke this week that Netflix might start cracking down on password sharing between people who don’t live in the same household, millions of TV-watching young adults’ hearts probably fluttered a little.

 

With the growing competition as Hollywood media firms and tech-savvy companies laid their eyes on churn growing, and post-pandemic growth prospects likely to flatten, driving subscribers and ratings for the world’s largest streamer, and keeping those viewers around for the long haul will become a little more difficult.

Netflix’s Password Sharing Crackdown Justified

One of the reasons why some Wall Street analysts have long suggested a crackdown on people exchanging Netflix passwords is to ensure that people who use the service are paying for it. Sharing Netflix passwords now seems to be on the verge of becoming a potential source of Millennial nostalgia.

First Sign Of Netflix Planning Crackdown

The company is experimenting with a prompt screen that checks if the account is theirs before allowing them to log in. Accounts are only supposed to be shared by people in the same household, according to the screen, which also includes click-through buttons to sign up for a separate account.

Netflix recently announced nearly 204 million global subscribers, up 36.5 million or nearly 22% year over year. 73 million of those accounts are in the United States, suggesting that under the new arrangement, the company is reaching market saturation on its home turf.

Outside Netflix’s data-science department, it’s hard to determine how many Netflix accounts share passwords beyond the household of the person who pays for them. However, some reports have shown that it is common, to the point that Netflix password sharing has become a rite of passage for many newly emancipated teenagers and twenty-somethings. The number of password freeloaders is possibly in the millions.

Given the lack of competition in previous years and last year’s pandemic-fueled rocket-ship flight, Netflix may have had little immediate incentive to worry about freeloaders while focusing on global growth, producing thousands of shows every month, and optimising content and interfaces in multiple languages. According to the researchers, Netflix may not have much room for the users sharing their passwords.

According to information released a few days back, Netflix’s original series managed to grab the largest share of audience demand among all streamers in 2020.

However, the company’s viewer dominance is decreasing, with global demand for its original series falling to a record low of 53.5 percent, down 6.3 percentage points.

All of the latest streaming platforms, many with dangling deep collections, and at least some high-profile originals based on popular franchises and brands like Marvel, Star Trek, and HBO, are to blame for the decline.

Apple TV+, which premiered on November 1, 2019, received 3.9 percent of the audience’s demand, followed by HBO Max and Disney+, which each received 3.6 percent. Other services accounted for 8.8% of total demand.

Also looking at the fact that Disney had few originals in 2020 that stirred audiences, it had one undeniable masterpiece, the Star Wars spinoff The Mandalorian, which was the most successful single series in the US and eight other global markets in the survey. Only Brazil was an outlier, with its viewers preferring Netflix’s older science-fiction series Stranger Things.

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