Netflix Australia password sharing: Crackdown brought forward, report says, as ad breaks loom too

Netflix could introduce its cheaper ad-supported subscription by the end of the year, ahead of originally planned, the New York Times reports.

The streaming pioneer also plans to crack down on password sharing among its subscribers around the same time, Tuesday’s report cited an internal note to employees.

Netflix did not immediately respond to a request from Reuters for comment.

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The company posted its first loss of subscribers in more than a decade last month and signaled bigger losses in the future, a sharp shift in fortunes from the boom it witnessed during the pandemic.

The sluggish subscriber growth prompted Netflix to consider offering a cheaper version of the service with ads, citing the success of similar offerings from rivals HBO Max and Disney+.

Chief executive Reed Hastings said in April’s earnings call that the company would “invent (the plan) in the next two years”.

Big changes are coming to Netflix – so what does this mean for subscribers?

What does the crackdown on Netflix password sharing mean for you?

Dark times are coming.

Netflix, which currently has 221.6 million users, saw record growth in demand in the early days of the pandemic, when people sitting at home binge-watched shows and movies in droves.

But fierce competition from other streaming platforms and password sharing has made it harder for Netflix to attract new viewers, claiming that 100 million households use the service without paying.

For the first time since 2011, Netflix has seen a decline in subscriber numbers, losing 200,000 subscriptions between January and March.

In a letter to shareholders, Netflix said more losses were to come and expects a dip of another two million in the coming quarter.

Netflix lost 700,000 subscribers in early March after deciding to suspend the service in Russia after the country invaded Ukraine. Credit: Brandon Bell/Getty Images

The streaming giant has confirmed major cuts to staff and content and suggested it could adopt new measures, including charging a password-sharing fee and introducing a cheaper subscription plan that includes ads.

Here are the changes viewers can expect from Netflix.

Keep the password private.

Since the early days of Netflix, the platform has allowed multiple accounts under one membership regardless of users living in different locations.

However, the service has announced that it will use one membership for several households.

Netflix announced in March that it would begin testing ways to charge users in Chile, Costa Rica, and Peru who share passwords a fee for the additional members.

Executives said this model could be expanded to other countries during the company’s earnings call on Tuesday, but it was unclear when those changes would be made.

According to Netflix, standard and premium account members can add “subaccounts” for up to two people living in separate households.

But the additional costs are about $A4 extra per month.

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Cheaper but at a price

The streaming giant is explorer, a cheaper tier of membership that would feature ads to stay competitive in the highly saturated streaming market.

Netflix co-founder Reed Hastings has long opposed carrying ads, but the company reversed course last month.

“Those who have followed Netflix know that I have been against the complexity of advertising and that I am a big fan of the simplicity of subscriptions,” Hastings said in a taped interview.

“But as much as I’m a fan of that, I’m a bigger fan of consumer choice.

“And it makes a lot of sense to let consumers who want a lower price and are ad tolerant get what they want.”

Hastings stated that Netflix has a two-year term to provide the option to subscribers.

Netflix has claimed that 100 million households use the streaming giant without paying. Credit: NurPhoto/NurPhoto via Getty Images

No splashes of money

The global service has halted several development projects and removed much staff from their positions.

Phil Rynda, Netflix’s Director of Creative Leadership and Development for Original Animation, has been fired, as has part of his team, The Wrap reports.

Some Netflix original series and movies, especially many animated series, has been discontinued.

“We are pulling back some of our spending growth for content and non-content,” said CFO Spencer Neumann.

“We’re trying to be smart about it and be careful about pulling back some of that spending growth to reflect the reality of the company’s revenue growth.”