Netflix plans to stop users from sharing passwords by end of March
The streaming service expects a 'near term' loss of engagement due to the new policy
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CFRA Research Director Ken Leon on Netflix's upcoming earnings report, how the company plans to crack down on password sharing and whether the streaming service trend is slowing down.
Netflix plans to bar users from sharing passwords for free by the end of March of this year, according to a recent company announcement in a letter to shareholders.
Back in October, the streaming giant said it would begin charging subscribers who share their accounts but did not give a specific date or information for when the new policy would be enacted.
In a quarter four earnings report released late last week, Netflix revealed it would implement the paid sharing system across the platform in the latter portion of quarter one.
"Today’s widespread account sharing (100M+ households) undermines our long term ability to invest in and improve Netflix, as well as build our business," Netflix said in a letter to shareholders. While our terms of use limit use of Netflix to a household, we recognize this is a change for members who share their account more broadly."
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Netflix announced in a recent letter to shareholders that it plans on ending password sharing by the end of March. (Mateusz Slodkowski/SOPA Images/LightRocket via Getty Images / Getty Images)
"So we've worked hard to build additional new features that improve the Netflix experience, including the ability for members to review which devices are using their account and to transfer a profile to a new account."
The company noted that the new policy would likely lead to "near term engagement" being "negatively impacted" as some users stop consuming content on the platform due to the loss of a free account.
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However, Netflix assured shareholders that, despite the new changes, engagement will grow "over time as we continue to deliver a great slate of programming and borrowers sign-up for their own accounts."
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