The dreaded day for generous spirits and mooches alike in the world of streaming is fast-approaching as Netflix continues to test methods for its password sharing crackdown. The streaming giant considers its efforts in territories it has tested its monetization efforts in to be a success, and it looks like the U.S. will be soon to follow – with a Stateside rollout to land in Q2 of this year, per the streaming giant’s Q1 earnings report.
Netflix conceded some initial friction as a result of the password-sharing crackdown (currently rolled out in Canada, New Zealand, Spain, and Portugal), however over time saw new accounts being opened up, and current subscribers increasingly opened up their wallets to the extra charges imposed for the addition of out-of-household users.
Using Canada as its comparative market, Netflix forecasts a similar, but ultimately revenue-raising reaction when the time comes for the new restrictions to land in the United States. Great news for its Wall Street backers, however end users aren’t as likely to be thrilled:
We’re pleased with the results of our Q1 launches in Canada, New Zealand, Spain and Portugal, strengthening our confidence that we have the right approach. As with Latin America, we see a cancel 5 reaction in each market when we announce the news, which impacts near term member growth. But as borrowers start to activate their own accounts and existing members add “extra member” accounts, we see increased acquisition and revenue. For example, in Canada, which we believe is a reliable predictor for the US, our paid membership base is now larger than prior to the launch of paid sharing and revenue growth has accelerated and is now growing faster than in the US.
To loop you in, the company’s current password sharing model adds an additional fee when it detects members outside of a user’s household accessing their Netflix account. In Canada, it turns out to be an additional cost of CAD $7.99 per month. The company will be adjusting the additional cost on a country-by-country basis.
Looks like fund managers were on the right track when predicting just how much more money Netflix stands to make as a result of its new initiative.