Say goodbye to sharing Netflix passwords, and say hello to ads

Netflix seems poised to implement some of the biggest changes to its business model in years. In the company’s Q1 2022 earnings call, CEO Reed Hastings dropped two bombshells.

Netflix lost subscribers

First: Netflix lost subscribers for the first time in a decade — 200,000 to be specific. That’s a far cry from the 2,000,000 subscribers the company predicted it would gain just three months ago.

It’s worth noting that Netflix is in the red on its subscriber count in part because of Russia’s invasion of Ukraine — it lost 700,000 accounts after shutting down its services in Russia. Still, even ignoring that chunk of accounts, Netflix fell well behind expectations.

In order to continue to combat dwindling growth, Netflix plans to crack down on password sharing, something which Hastings has previously called “a positive thing” on multiple occasions.

On today’s call, Hastings instead said “we’ve just got to get paid for them,” referring to the estimated 100 million viewers who use the service for free. Netflix says that its anti-password sharing system will take a year or so to deploy globally.

The crackdown on password sharing doesn’t come as a huge surprise. I’d imagine most Netflix users knew this was coming eventually, but Netflix was still growing quickly enough that the company didn’t consider password sharing to be a major issue.

The company has actually been testing deterrents to password sharing for a few months now. That said, COO Greg Peters indicated that Netflix may not completely eliminate password sharing but rather charge people for it. That suggests the company might consider offering a shared plan for people that might not live in the same household, although Peters didn’t specify as much.