Netflix looks to monetise password-sharing with new feature

After pivoting towards an advertising-supported revenue model in April this year, Netflix has now announced that users from five Latin American countries would have to pay an additional fee for using their Netflix account outside of their registered home address. 

Netflix members from Argentina would have to spend an additional $1.70 every month, while users from the Dominican Republic, El Salvador, Guatemala, and Honduras would have to shell out an additional $2.90 per month to use the new “add a home” feature on their accounts, Chengyi Long, Director, Product Innovation, said in a blog post on July 19.

The additional fee, which is an attempt to monetize the common practice of sharing passwords, would not apply to mobile, tablet or laptop devices.

“It’s great that our members love Netflix movies and TV shows so much they want to share them more broadly. But today’s widespread account sharing between households undermines our long term ability to invest in and improve our service,” the company said in the blog post.

Earlier in March 2022, Netflix had announced an “add a member” option on the platform for users from Chile, Costa Rica and Peru. According to this feature, Standard and Premium Netflix account users can create a sub-account for a maximum of two people they don’t live with, in exchange for a fee. These measures are in line with Netflix’s one home per account policy. 

Netflix has had to rethink its revenue model after the streaming service shed 200,000 subscribers in the first quarter of the current financial year, the first time the company reported a loss in users since 2011. Further, the company has forecasted an additional loss of two million subscribers for the second quarter. 

The company has lost more than 60 percent of its value on the stock markets in the last six months and has been the worst hit amongst the FAANG (Facebook, Apple, Amazon, Netflix, Google) companies, which have also seen a decline in market value.

Netflix, which has been advertisement-free for a greater part of its existence, launched an advertising supported revenue model in partnership with Microsoft on July 14. The partnership will see an introduction of an ad-supported subscription plan, in addition to the preexisting ad-free basic, standard and premium plans offered by Netflix.