Netflix is set to crack down on US customers who share their accounts with others, with plans to charge such users, a move that could see a spike in growth in the latter half of the year. The streaming giant is testing ways to reduce account sharing in Latin America, where it has already rolled out a plan to charge users in four regions.
According to Netflix, over 100 million people use an account they don’t pay for. Analysts suggest that paid sharing could be a potential source of new customers or sales. Originally planning to start charging for password sharing in the US in the first quarter of 2023, the company now says it will do so in the coming months.
Netflix’s first-quarter results showed a lower-than-expected gain in subscribers, adding only 1.75 million subscribers instead of the 2.41 million expected by investors. The company has responded to its slowing growth by launching two new initiatives: a password-sharing plan and an advertising-supported tier. Netflix generated more than $2 billion in free cash flow in the first quarter, reporting net income of $1.31 billion.
The service added just 100,000 customers in the US and Canada after losing nearly one million last year. However, it is still the most popular TV network in the US, accounting for over 7% of all TV viewing, more than double that of any pay service.
The Asia-Pacific region continues to be Netflix’s largest source of new customers, with the service adding 1.46 million customers there in the quarter. Netflix has said it is being more sophisticated about pricing, with lower prices in India and other poor countries contributing to its growth.
The company also raised its free cash flow forecast for 2023 to $3.5 billion and predicted that new initiatives such as a password sharing plan and ad-supported tiers would drive growth in the second half of 2023.
Although the crackdown on password sharing may cause some customers to stop using the service in the short term, Netflix hopes this will deter them from paying for their own account or paying to share the account they are currently using. Will motivate to do, which can boost sales in the markets. America and Latin America.
(with agency inputs)
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