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Here’s why Netflix is really cracking down on password-sharing

Netflix likes money.

netflix password sharing tweet on a purple background
Image: KnowTechie

If you missed the news, Netflix is running a test where they charge users who share their passwords an extra fee. The test charges customers who share passwords an additional $2-$3 a month and is being conducted in countries like Chile, Costa Rica, and Peru.

Now, mind you, Netflix has gone back and forth on how it feels about password sharing. In some cases, the streaming giant even advocated for it. But now they say it’s “impacting [their] ability to invest in great new TV and films for our members.”

Sure, but what’s the real reason the company decided to crack down on password-sharing? The obvious answer here is money. Like, a lot of it. According to Wall Street analysts, Netflix is missing out on a whopping $1.6 billion in revenue. Yes, $1.6 billion. Via Variety:

According to estimates by Cowen & Co. analysts, if Netflix rolls the program out globally it could add an incremental $1.6 billion in global revenue annually, or about 4% upside to the firm’s 2023 revenue projection of $38.8 billion. The firm’s estimate assumes that about half of non-paying Netflix password-sharing households will become paying members; further, the model predicts that of those, about half will opt to sign up for their own separate paid account.

Honestly, with a figure like that, it’s tough to be mad at them. If I were running a company and had the chance to recoup $1.6 billion in revenue, I would probably be doing the same thing as Netflix here.

READ MORE: You can now ‘Two Thumbs Up’ shows on Netflix

But as expected, users are not happy about it. “Netflix should be more worried about its mediocre content output instead of password sharing,” said one tweet.

Another Twitter user writes, “Netflix being like ‘we’re cancelling everything you’ve ever loved AND raising our rates, but you’re stealing from us if you share your password with your family’ is certainly a choice.”

READ MORE: Netflix says 100 million accounts share passwords, but not for long

Hopefully, this password-sharing test ends up just being a test. However, if the company plans to push out password-sharing fees globally, it’s time to hit the panic button. Eventually, all good things must come to an end.

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Kevin is the founder and executive editor at KnowTechie. With over 15 years of blogging experience, Kevin has transformed what was once a passion project into a full-blown tech news publication. Shoot him an email at kevin@knowtechie.com

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