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The era of sharing a Netflix password is finally over.
The world’s biggest streaming service is serious about cracking down on the 100 million users it says are watching content but not subscribing.
Though Netflix initially promised a first-quarter launch for its paid sharing offering in the U.S., the company said in an earnings report today that the plan would officially roll out in the second quarter.
And it knows that subscribers won’t be happy about it.
“We see a cancel reaction in each market when we announce the news, which impacts near-term member growth,” the company said in an earnings release, adding, “But as borrowers start to activate their own accounts and existing members add ‘extra member’ accounts, we see increased acquisition and revenue.”
Because of the delayed rollout of its paid sharing plan, the company acknowledges that some of the expected membership growth and revenue benefit will fall in Q3 rather than Q2; however, the company said the plan “will result in a better outcome from both our members and our business.”
Netflix already launched the paid sharing requirement in several markets, including Canada, New Zealand, Spain and Portugal, following testing in Latin America. In Canada, which the company believes is a reliable predictor for the U.S., its paid membership base is now larger than before the launch of paid sharing, and its revenue growth is moving faster than in the U.S.
Though the company originally intended to launch paid sharing in the U.S. sooner, Netflix said with each launch, it learned more about how to avoid the changes that would most upset customers and about users’ priorities, which include the ability to watch while traveling and transfer profiles to separate accounts.
“We found enough improvement opportunities in these areas to shift a broad launch to Q2 to implement those changes,” the company said.
Regarding its first quarter results for 2023, Netflix added 1.75 million subscribers, bringing its total to 232.5 million. The company added 100,000 subscribers in the U.S., with the majority of additions coming from APAC. Latin America, the first market to experience paid sharing, lost 450,000 subscribers.
In its release, the service touted recent hits Outer Banks, You, Ginny & Georgia and Murder Mystery 2. Additionally, The Night Agent became the streamer’s 6th most popular English language TV show, and The Glory took the title of 5th most popular non-English TV show.
