It appears that Netflix recently reported a loss of 200,000 subscribers. As a result, Netflix is apparently going to begin cracking down on accounts that partake in password sharing. This will be done in an effort to keep their numbers up, with Netflix having changed their policies in the past to prevent password sharing from happening. Interestingly, it must be noted that Netflix actually lost 700,000 subscribers due to the suspension of services in Russia following the Ukraine invasion. At the same time, however, Netflix gained 500,000 subscribers. As such, they only had the aforementioned net loss of 200,000 subscribers. Unfortunately, however, these numbers were still bad compared to Netflix’s expectations.
It turns out that Netflix actually expected to earn 2.5 million subscribers during the last quarter. As such, this means their math was off by 2.3 million subscribers.
Now, Netflix released the following letter to their shareholders regarding their potential growth:
“However, our relatively high household penetration – when including the large number of households sharing accounts – combined with competition, is creating revenue growth headwinds. The big COVID boost to streaming obscured the picture until recently. While we work to reaccelerate our revenue growth – through improvements to our service and more effective monetization of multi-household sharing – we’ll be holding our operating margin at around 20%.”
The letter continues to address the monetization of password sharing:
“Early last year we started testing different approaches to monetize sharing and, in March, introduced two new paid sharing features, where current members have the choice to pay for additional households, in three markets in Latin America. There’s a broad range of engagement when it comes to sharing households from high to occasional viewing. So while we won’t be able to monetize all of it right now, we believe it’s a large short- to mid-term opportunity.”
As such, it’ll be interesting to see what changes the streaming service has in store for the future – and how it’ll impact their subscriber numbers.