The writing may be on the wall for sharing Netflix accounts

Illustration by Alex Castro / The Verge

In its first quarter earnings letter to shareholders, it gave a big clue as to why it was cracking down on password sharing.

First, it’s increasingly clear that the pace of growth into our underlying addressable market (broadband homes) is partly dependent on factors we don’t directly control, like the uptake of connected TVs (since the majority of our viewing is on TVs), the adoption of on-demand entertainment, and data costs. We believe these factors will keep improving over time, so that all broadband households will be potential Netflix customers. Second, in addition to our 222m paying households, we estimate that Netflix is being shared with over 100m additional households, including over 30m in the UCAN region. Account sharing as a percentage of our paying membership hasn’t changed much over the years, but, coupled with the first factor, means it’s harder to grow membership in many markets - an issue that was obscured by our COVID growth.

The service is shared with over 100 million households in the US and Canada, according to the company. There is a lot of people who aren't paying for the ability to stream their favorite shows.

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The company is testing a new feature in three countries where subscribers can add subs for up to two people outside of their home. It's not clear when the test will be expanded to more countries, but it's likely that the company wants to roll it out sooner than later.

In the last quarter, it lost subscribers for the first time in a decade.