Explained: Why Netflix is cracking down on password sharing

• In essence, Netflix prohibits password sharing to increase sales.
• Netflix is considering new tactics in response to stagnant growth.
• Despite revenue concerns, Netflix attracts 5.9 million users in a quarter.
•  Netflix, a major international streaming service, has reminded its Indian subscribers that it is taking steps to prevent password sharing and that their account is just for them and their family members.

In order to address its slow revenue growth and stagnant subscriber base, Netflix increased the scope of its crackdown on password sharing in May.

In the past, numerous users could share a single Netflix account, but the streaming giant has implemented tight steps to prevent password sharing in order to increase subscriptions and income per user.

Users shouldn't be surprised by Netflix's tweak on password sharing because the streaming behemoth has been searching for methods to monetize in the face of increased competition in the content streaming industry.

Despite being the largest multimedia streaming service in the world, it has had difficulty expanding after experiencing a period of tremendous growth during the Covid-19 pandemic.

Netflix has been experiencing subscriber growth stagnation for a number of quarters, which has had a significant impact on its revenue as well.

The streaming juggernaut released weaker-than-anticipated second-quarter results on Wednesday, which caused its shares to drop by almost 9%. Lower than expert expectations of $8.3 billion, the company's quarterly revenue increased 2.7% from a year earlier to $8.2 billion.The company also predicted third-quarter revenue would be $8.5 billion, which is less than what Wall Street anticipated. Netflix is looking at dramatic choices due to two main factors: slow income growth and a gloomy future picture.

The crackdown, did it work?

Although Netflix's revenue outlook for the upcoming quarter is still dim, the campaign against password sharing appears to be having an impact.

In the second quarter, the corporation added 5.9 million subscribers, showing that more people are now signing up to use its services.

Analysts had predicted 1.9 million new customers, but there have actually been close to six million added. As of the end of June, Netflix has 238.4 million customers globally.

"While we've made steady progress this year, we still have more work to do to reaccelerate our growth," the company wrote in its quarterly statement to shareholders. With an emphasis on content and more monetization, among other things, Netflix anticipates revenue growth to pick up in the second half of the year.

Crackdown on password sharing by Netflix In an effort to increase money, Netflix intensified its crackdown in May on users who shared their passwords with persons outside of their immediate families.

After learning that more than 100 million households shared accounts, the business made this choice. The business explicitly stated that the password-sharing policy would be extended to all of the nations in which it operates in its second-quarter earnings report.