Netflix to Expand Charging South American Subs for Password Sharing

Netflix is expanding its new policy charging select South American subscribers an additional fee when they share their passwords. Netflix first launched the monthly “add extra member” fee in March in Chile, Costa Rica and Peru. Beginning in August, subscribers in Argentina, Honduras, the Dominican Republic, El Salvador and Guatemala will pay an additional $2.99 per month “add a home” fee if they are accessing content outside of their primary residence (and not on a portable device).

“It’s great that our members love Netflix movies and TV shows so much they want to share them more broadly,” Chengyi Long, director of product innovation, wrote in a blog post. “But today’s widespread account sharing between households undermines our longterm ability to invest in and improve our service.”

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Long said impacted subs would soon be able to control where their account is being used — and remove homes at any time — from the account settings page.

“We’re working hard … to be as thoughtful as possible about how we charge for use across multiple homes,” Long wrote. “We will not make changes in other countries until we better understand what’s easiest for our members.”

Netflix reports second-quarter financial results today after the market close.

Analysis: 33% of Netflix Subs Share the Service

New consumer research from Leichtman Research Group found that 83% of U.S. households have at least one streaming video service from the 15 top direct-to-consumer and subscription video-on-demand services, including 67% of all households with Netflix.

However, not all Netflix and other streaming services are paid for directly by those who use them. The study found that 64% of Netflix subs do not share their account with others outside the household, while 33% are used by more than one household.

Specifically, Leichtman found that 15% of Netflix services are used and paid for by those that also share them with someone outside the household. Another 15% of Netflix accounts are used in one household but are borrowed from another household that is paying for the service, while 3% of services are used by multiple households that share costs, and 3% are not paid for because they come with another service.

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These findings are based on an online survey of 4,400 households from throughout the U.S. and are part of a new LRG study, Internet-Delivered Pay-TV Services 2022. This is LRG’s fifth annual study focused on the online pay-TV category, along with other DTC streaming video services.

“Password sharing is an inherent feature of most streaming services,” analyst Bruce Leichtman said in a statement. “Sharing helps to expand the user base and retain customers, but it also creates a gap between the number of households that have a service, and actual paying subscribers.”

Other findings from the study include that 29% of all DTC services are shared with others outside the household, 12% of all DTC services are fully paid for by someone outside the household, 34% of adults ages 18-34 have at least one DTC service that is fully paid for by someone else — compared to 14% of ages 35+.

About 5% of all households had Netflix in the past year, but currently do not — similar to 6% for Hulu, 5% for Amazon Prime, and 5% for live pay-TV services. Adults ages 18-44 account for 65% of all with an online pay-TV service. Another 79% of online TV subs are very satisfied with their service — compared with 76% in 2020 and 69% in 2018. And 23% of all these services are shared by multiple households, including 7% of all services that are fully paid for by someone outside the household.

Report: 27% of Subscription Streaming Video Service Passwords Shared

New consumer research from Leichtman Research Group found that 82% of U.S. households have at least one streaming video service from a list of 11  options; 51% of all households have three or more of these services. However, not all of these services are being paid for directly by those who use them.

Leichtman found that 69% of all SVOD services are fully paid for and are not shared with others outside the household. At the same time, 27% of all direct-to-consumer services are used in more than one household; 13% of services are used and paid for by those that also share them with someone outside the household; 12% of services are used in one household but are borrowed from another household that is paying for the service; 2% of services are used by multiple households that share costs; and 4% of all services are not paid for because they come with another service.

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These findings are based on an online survey of 6,262 households from throughout the United States.

Separate research contends SVOD behemoth Netflix is losing billions annually in potential revenue due to password sharing.

Leichtman also found that 16% of all households have at least one DTC service that is fully paid for by someone else; 26% of adults ages 18 to 34 have at least one DTC service that is fully paid for by someone else, compared with 12% of ages 35 and older. Adults ages 18 to 44 account for 63% of those with an online pay-TV service; 77% of online TV subscribers are very satisfied with their service, compared with 69% in 2018; 13% are very likely to switch service in the next six months, compared with 27% in 2018; 20% of all services are shared by multiple households, including 6% that are fully paid for by someone outside the household.

“Password sharing is [quite] prevalent throughout the streaming video industry,” analyst Leichtman said in a statement. “Yet, sharing of streaming services should not solely be viewed as lost revenue, as the ability to share with others is also part of the retention strategy for the services.”