Netflix’s password sharing crackdown could come by the end of March

Netflix confirmed in a shareholder letter late last week that its move to no longer allow users to share passwords for free could begin by the end of March.

In October, Netflix announced plans to change its policy on password sharing and said it would eventually start charging people to share accounts, but at the time it did not give a specific date for when the new policy would begin.

Even now, the company has not specified a date but did say in the letter that it would begin rolling out paid sharing more broadly “later in Q1 [quarter one].”

“While our terms of use limit use of Netflix to a household, we recognize this is a change for members who share their account more broadly. So we’ve worked hard to build additional new features that improve the Netflix experience, including the ability for members to review which devices are using their account and to transfer a profile to a new account,” the company said.

In the letter, it detailed that account sharing, which it said is done in more than 100 million households, “undermines” its ability to invest and improve.

The company, which described 2022 as a “tough” year, suffered its first subscriber loss in more than a decade when its customer base fell by 200,000 subscribers in the first quarter of last year.

Despite those losses early last year, Netflix shared it ended on a “brighter finish,” praising its fourth-quarter revenue, operating profit, and membership growth as it exceeded forecasts with content like Harry and Meghan that “outperformed” its expectations.

The company noted in the letter, however, that the planned crackdown on account sharing will likely lead “near term engagement, as measured by third parties like Nielsen’s The Gauge”  being “negatively impacted.”

In efforts to increase growth, the company also launched a lower-priced ad-supported plan in November, stating that the move has driven “incremental membership growth.”

“We believe we have a clear path to reaccelerate our revenue growth: continuing to improve all aspects of Netflix, launching paid sharing and building our ads offering,” Netflix said.