Netflix announced in March that it planned to disrupt password sharing, and in its letter for the first quarter earnings to shareholders (pdf) gave a big idea why.
First, it is becoming increasingly clear that the growth rate of our main target market (broadband homes) depends in part on factors that we do not directly control, such as the uptake of connected TVs (since most of our viewing is on TVs) , reception of entertainment on request and data costs. We believe that these factors will continue to improve over time, so all broadband households will be potential Netflix customers. Second, in addition to our 222 million paying households, we estimate that Netflix shares with over 100 million additional households, including over 30 million in the UCAN region. Account sharing as a percentage of our paying membership has not changed much over the years, but, together with the first factor, it means that it is more difficult to increase membership in many markets – a problem that has been clouded by our COVID growth.
Netflix has 222 million “paying households,” but said the service is shared with more than 100 million “additional households,” 30 million of which are in the United States and Canada. This shows that there are a huge number of people who do not pay directly to Netflix for the opportunity to stream their favorite shows.
The company is currently testing a new feature in Chile, Costa Rica and Peru, where subscribers can add “sub-accounts” for up to two people away from home at discounted prices. It is unclear when the test could be extended to more countries, but given how many people watching Netflix can pay, but no, it seems likely that Netflix will want to launch it sooner rather than later.
Netflix also revealed on Tuesday that it had lost subscribers for the first time in a decade in the last quarter.
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