As Netflix prepares to launch a lower-priced, ad-supported subscription — effective in the U.S. by Nov. 3 — it also announced in its quarter three earnings update it will be cracking down on password-sharing among its subscribers.
“Finally, we’ve landed on a thoughtful approach to monetize account sharing,” the company noted in its Oct. 18 shareholder letter.
Starting at the beginning of 2023, subscribers will be able to transfer their Netflix profiles to friends’ and families’ accounts as an extra member. The sub-accounts, accessed via its own login, will cost extra for the primary member.
Netflix tested the new plan earlier in the year in South and Central American countries; subscribers paid an extra $2.99 for additional homes that utilized a Netflix user’s fully paid account. It’s not clear how much it will cost stateside or if there is a limit to members once implemented.
Netflix’s new ad-sharing subscription is poised to be priced at $6.99, down from the ad-free option at $9.99.
The streamer made a move to hone in on password-sharing after its first quarter report indicated a decline in subscribers for the first time. It estimated roughly 100 million households streamed without payment.
Its third quarter exceeded the company’s expectations, though remained down from last years Q3: $1.5 billion versus $1.8 billion respectively.
“We estimate they [other streaming platforms] are all losing money, with combined 2022 operating losses well over $10 billion, vs. Netflix’s $5 to $6 billion annual operating profit,” the letter stated.
Netflix added 2.4 million subscribers in the third quarter, nearly doubling its projections.
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