Netflix is set to introduce its “paid sharing” initiative in the United States in the coming weeks, aiming to curb the unauthorized sharing of login credentials among users. The U.S. launch is part of a broader global rollout planned for the current quarter, according to the company’s recent quarterly letter to shareholders.
The streaming giant had previously turned a blind eye to password sharing among its subscribers, but with billions of dollars in potential revenue being lost, the company has decided to take action. Co-CEOs Ted Sarandos and Greg Peters acknowledge that there may be backlash from some subscribers, but they believe that the long-term benefits outweigh any short-term challenges.
Netflix tested the paid sharing program, which allows subscribers to pay a fee to add another user to their account, in four countries during the first quarter. The company reported being pleased with the results and learned valuable lessons from these initial rollouts.
The shareholder letter explained, “We’re pleased with the most recent launches of paid sharing, and while we could have launched broadly in Q1, we found opportunities to improve the experience for members.” Netflix has incorporated these learnings into the upcoming global launch, with the expectation of even better results.
Although specific pricing details for the paid sharing program have not been released, Netflix did mention that it expects a financial impact on both second-quarter and third-quarter results. The company is confident that the move will ultimately benefit both its members and its business, as they work to balance user experience with revenue growth.