Netflix May Crack Down on Password Sharing

Netflix stock tumbled as it reported earnings and also that it lost subscribers in the first quarter for the first time in a very long time. Decades even. The company also announced that they are considering a global crackdown on password sharing, a thing that the company has been very aware of over the years and even tracks the numbers.

It is estimated that a staggering 100 million households are sharing their Netflix passwords, a problem that has been mostly overlooked by the company since despite this practice, the company was still largely growing anyway.

I do know quite a few people who share their passwords even. I do not share mine.

Some people make the argument that it is no different than going to a store and buying a bottle of booze or a rotisserie chicken and sharing it with others, or lending a shirt to a buddy. Or two neighbors going in on a snow blower to save a few bucks between them.

The difference of course is that when you buy a bottle of booze or a rotisserie chicken, a shirt or a snow blower, is that the company is getting the full value in exchange for what they are selling.

The company, in other words, is not harmed financially if you share a bottle of Crown Royal among friends.

In the case of Netflix, if three people are all watching the programming and using the service but only one person is actually paying for the services, Netflix is not receiving full value for the services they are providing. And we have to keep in mind that Netflix must also pay their content providers.

So, not only is Netflix potentially out the money. So are the people who are providing the content.

Netflix could just simply raise prices. But from a practicality standpoint that would not sit well with even the customers who are paying for and sharing the services. Keep in mind what the mentality of these customers already is.

They already view the $15 per month that the streaming service charges to be too much, which is why they are prone to the password sharing in the first place.

My personal thought is that the practice is simple theft. And if I were a shareholder of the company, which I am not, I would actually be questioning why the practice was allowed at all even if the company was growing, and likewise my investment.

How much more money is on the table here? would be one of my questions. As well as, how do we ensure that the practice is not expanded to a point that someone might share their password with many more people than just a few friends or family?

The crackdown will likely meet with some challenges as well of course. At least in the short term. Because even if the crackdown is not a price increase for the services, the fact that those who share passwords will now have to pay full price for the service in their eyes will be the same thing as a price increase.

Granted, the company has not made an official decision on shared passwords yet. But certainly whether or not they pursue it will depend on whether or not they continue to lose subscribers.

The other question becomes did they actually lose subscribers or just lose people paying for the services? In other words, are the ones who left the service still watching and just using someone else's shared service?

And if that is the case, then the trend for Netflix and the ability to operate profitably would be in serious jeopardy. So, the bottom line is that Netflix has to address the issue before it gets away from them.

Anyone who is using the service and who likes the service regardless of whether or not they are paying fully for it should be concerned as well. Because if Netflix cannot operate profitably, there will be no Netflix for anyone to share.

Lead image courtesy of Pixabay, user Tumisu. Netflix Watching Tv Streaming - Free photo on Pixabay