Dubai, United Arab Emirates (CNN) – Netflix shares fell last week after the platform reported its first subscriber loss in more than a decade, a factor the company has cited as malicious earnings: widespread password sharing.
Does that mean the company is kicking millions of viewers out of shared accounts? not exactly. But that may mean Netflix subscribers around the world may have to pay more to keep their kids, friends or colleagues in their accounts.
Netflix has allowed its subscribers to share their passwords for years without much interruption. In fact, in its letter to investors on Tuesday, the company admitted that the policy may have helped boost its growth by “attracting more people to Netflix and enjoying its services.”
However, that growth has stalled sharply, and the company said on Tuesday that it is now looking at how best to monetize subscriptions. The company noted that of the 222 million paying households worldwide, it estimates that accounts are shared with more than 100 million additional households.
Is this the end of sharing a password for a Netflix account?
So what does this mean for your account? This is unclear as Netflix is in the early stages of figuring out how to make more money sharing the account.
The company said last month that it had been working for a year on ways to “enable members who share accounts outside their homes to do so easily and securely, while also paying more for it.” That means: You have to pay for these extra people in your account.
The company rolled out 2 functions for testing in 3 overseas markets called ‘Extra Member’ and ‘Profile Transfer’. Costs vary based on a number of factors, but Netflix said features can be added for “a fraction of the service’s base price.”
With an additional member, subscribers to Netflix Standard and Premium packages can add an account that benefits two people they do not live with.
These “extra” members will have full access to the primary Netflix account and will have their own profiles and logins. Additional memberships do not count toward your total Netflix paid subscriber numbers.
So if you have someone in your Netflix account who does not live in your family – a distant college child, a friend, a distant cousin or whatever – you pay extra for them to use the service.
The “Profile Transfer” option allows subscribers, regardless of the price of their subscription, to transfer their profile information to a new paid account.
Both features are currently being tested in Chile, Costa Rica and Peru. Netflix is usually testing its new features in smaller markets before being rolled out widely, and it is not clear at this time whether an “additional member” or “relocation profile” will be more available or scrapped.
But with the company’s stock falling and investors doubting its future growth potential, it’s a good bet that these or similar opportunities can be implemented sooner rather than later.
Wherever you go, Netflix goes online
“We’ve always tried to make sharing in a member’s home easy through features like profile sharing,” the company said Tuesday. “While this has been very popular, it has created confusion about when and how Netflix can be shared with other families.” We will not be able to make money on all that right now, but we think it’s a great opportunity in the short to medium term. “
Again, having customers pay for the privilege of sharing their account can backfire. Netflix already raised its prices earlier this year, and the extra cost could be negatively reflected on its subscriber base.
The company is still in the early days of figuring out how to monetize password sharing, and if Netflix imposes restrictions on practices, other companies are likely to follow suit. As a leader in this field, Netflix’s decision could have implications across the industry as a whole.