Big news: Netflix is testing a feature that allows the primary account holder to add two additional households.
Big question #1: Where is Netflix testing this out?
Quick answer: Chile, Costa Rica, and Peru.
Why this matters: 11% of Netflix subscribers share their passwords with someone outside of their household.
Rate of password sharing according to Kagan Consumer Insights:
1) Netflix – 11%
2) Disney+ – 11%
3) Hulu – 8%
4) HBO Max – 7%
5) Amazon Prime – 5%
6) Average – 10%
Bottom line: Adding this feature could add $1.6B (↑ 4%) in revenue for 2023 vs. the current estimate of $39B.
Quote from Michael Pachter – Research Analyst @ Wedbush Securities:
“I suspect that a crackdown will result in 5 percent subscriber growth, partially or fully offset by an increase in churn, and it won’t impact financials much, if at all. I think they are doing this now because growth has stalled to a crawl.”
Big question #2: Does each service handle password sharing consistently?
Quick answer: Each service has its own standard for the number of profiles and/or simultaneous streams.
By the way: Netflix ran a test in 2021 that contained a warning for accounts suspected of borrowing login information.
Flashback: Netflix, HBO and Cable Giants Are Coming for Password Cheats
Alternative take: Matthew Ball provides a smart use case for why password sharing may be driving higher revenue.
