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The End of an Era is Here For Netflix

The End of Free Netflix Password Sharing Has Come

On Wednesday, the streaming service began rolling out a system that charges fees for “extra member” sub-accounts when people outside one household use the same membership, launching in Canada, New Zealand, Portugal and Spain. Initially, this Netflix crack-down concept was to be rolled out in the United States but was immediately retracted in the country after a plethora of memes hit the internet:

@sirmemeselot Netflix taking another L #netflix #funnymemes #memes #funniestmemes #netflixpassword ♬ original sound – Sir Memesalot

In March 2021, Netflix (NASDAQ: NFLX) began testing new password-sharing rules that require users to verify their accounts through a code sent to the primary account holder’s email or text message before being able to access the platform. This move has been met with mixed reactions from users, prompting some to rethink their subscription with the company.

While Netflix’s terms of service have always prohibited password sharing, the company has essentially turned a blind eye to the practice. However, with the proliferation of streaming services and the need to compete for subscribers, the company is now taking a more active approach to enforcing these rules. The idea behind the new password-sharing rules is to prevent non-paying users from accessing the platform through shared passwords.

On the one hand, this move is understandable from Netflix’s perspective. By preventing password sharing, the company can increase revenue and reduce the number of freeloaders on its platform. Additionally, by encouraging more users to sign up for their own accounts, the company can better understand its user base and tailor its content to suit their needs better.

However, this move could also have some unintended consequences for Netflix. For one, it risks alienating some of its current users, who have become accustomed to sharing passwords with friends and family. These users may decide to switch to other streaming services that do not have as strict password-sharing rules, already tanking their stock this month.

Source: Barchart.com

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The move could also dissuade potential new users from signing up for the service. If someone is considering whether to subscribe to Netflix or a competing service, the fact that Netflix has more stringent password-sharing rules could tip the scales in favour of the competition. Furthermore, this move could also impact how users view the company. By enforcing these rules, Netflix may be perceived as more corporate and less consumer-friendly. This could damage its reputation and make it more difficult for the company to attract and retain customers in the future.

With our final thoughts, while Netflix’s new password-sharing rules are understandable from a business perspective, they could have unintended consequences. The move risks alienating current and potential users, and it could harm the company’s reputation in the eyes of consumers. Only time will tell whether this move will ultimately benefit or harm the company’s long-term success. How do you think the change will impact the company?

Shares of Netflix are currently trading at $312.54 per share, down -0.3% on the day. YTD, NFLX stock is up +5.96%.

Learn more about Netflix: Website | Investor Deck | NFLX Chart

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Disclaimer: Wealthy VC does not hold a position in any of the stocks mentioned in this article.

Justin Hopper

Justin Hopper is an editor of the digital media at Wealthy VC and TCI. If you have questions don't hesitate to reach out! Twitter | Email

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