The era of Netflix password sharing is coming to an end. Streaming plans to implement password sharing rules “more broadly” by the end of the first quarter of 2023, the company reported in its earnings report.
Netflix also announced that CEO Reed Hastings is stepping down after 25 years of running the company and will pass the baton to Ted Sarandos, who was already serving as co-chief executive officer, and Greg Peters, the former chief operating officer of Netflix. Hastings is not leaving the company entirely, but will take on the role of executive chairman.
Netflix says it expects some “cancellation backlash” in each market, but the long-term benefits of people paying for additional accounts will lead to “improved overall revenue.” The company hasn’t given any information on pricing or a specific date, but “later in Q1 ’23” means it could happen sometime in April.
Netflix has already tested different ways to combat password sharing in South America and has begun offering users in Chile, Costa Rica and Peru to pay for an additional sub-account if the streamer discovers that someone using the account lives outside the subscriber’s home. In May, Rest of World reported that this anti-password sharing test doesn’t fare too well: subscribers in Peru said they weren’t officially notified of the policy and that compliance levels varied among users.
In addition, the service also allowed users in Argentina, El Salvador, Guatemala, Honduras and the Dominican Republic to purchase additional “homes” for anyone living outside the subscriber’s primary household.
Banning password sharing is just one of the methods Netflix is using to appease investors as subscriber growth continues to slow. In the fourth quarter of 2022, Netflix reported about 7.6 million new global subscribers. That beat analysts’ expectations, but was still down slightly from the 8.2 million followers the company added around the same time last year.
Netflix still faces stiff competition from other streaming services as its subscriber numbers stabilize and it looks to capitalize on those it already has. Disney Plus launched an ad-supported subscription last year and continues to attract subscribers to a bundle with Hulu and ESPN Plus. Meanwhile, Home of the Dragon had a record-breaking series premiere on HBO Max last year, and The Last of Us debuted close behind with 4.7 million viewers overnight.
It’s starting to look like 2023 may be less successful for Netflix as it continues to cap content spending at $17 billion, a cut reflected in this year’s film lineup.