Analysts Predict Increased Revenue For Netflix as it Intensifies Crackdown on Password Sharing

Analysts have predicted that video streaming platform Netflix could see more increase in revenue as it intensifies its crackdown on password sharing.

Analysts at Wells Fargo suggest that there are roughly 30 million shared Netflix accounts in the United States and Canada. They estimate that about 15% will pay to add another user to the existing account and roughly 25% will become a new subscriber. They further suggested a new revenue stream of $90 million to $2.5 billion.

Also, a global leader in financial services offering solutions J.P Morgan disclosed that Netflix’s password-sharing rule could lead to an increase in its stock price.

All these predictions of increased revenue for Netflix are coming after the video streaming platform has begun to roll out new guidelines internationally, limiting subscribers from being able to access their accounts from multiple households. Reports reveal that the new rules would be rolled out in the United States by the end of March.

Speaking at the company’s Fourth Quarter (Q4) financial report for 2022, Netflix co-CEO Greg Peters disclosed that the company’s crackdown on password sharing will not be a universally popular move. As such, Netflix expects to temporarily see numerous users close their accounts. He however believes those individuals will eventually return when a popular TV show is released.

Investors King understands that Netflix had reportedly aimed to implement this measure by the end of 2022. It however missed that deadline, but that hasn’t deterred it from proceeding with its plans to crack down on password sharing.

It is widely known that Netflix for a long time has allowed users to share passwords with family and friends which has cost the company a huge loss in revenue. According to Fortune, Netflix loses $6.25 billion in annual income because of password sharing. 

In a bid to crack down on password sharing to increase its revenue, in 2021, Netflix began to warn users about the need for them to create their account if they don’t live with the primary account holders. In its new move to crackdown on password sharing, Netflix will ask users to provide a primary location for all accounts within the same household.

Netflix will use IP addresses, device IDs, and device activity to determine if the device is within its primary location. If an account is consistently accessed outside of the primary location, it will likely be blocked.

To access an account on a device outside of the primary location, the account holder will receive an email with a four-digit code, which they will have 15 minutes to enter before it expires.