US streaming giant Netflix is to crackdown on US password sharing by the end of June, 2023. In a letter to its shareholders on 19th April, the company reported that its second quarter financial year will see a broad rollout of paid sharing in US – essentially people not living in the same household but sharing login details will be required to pay.
The company had long been seen as the winner in the so-called streaming wars until its 2022 second quarter earnings report in April when its leading track record hit an inflection point. The streaming giant lost subscribers for the first time after what had been a decade-long ascension. Markets reacted swiftly with a 60% drop in the company’s stock value, wiping out more than $54.4bn from the company’s market capitalisation.
In addition, while the company added 8.3 million subscribers in the last three months of 2021, bringing total subscriber growth for the year to 18.2 million, it was the lowest annual subscriber gain since 2016.
The streaming giant has been trialling a number of initiatives to address flagging growth including a cheaper subscription option including ads and crackdowns on password sharing. The company reported that it was “pleased with the results” from its expanded trial of paid password sharing which began in February.
The Los Gatos, California, headquartered company reported revenues of $31.6bn for the fiscal year ended December 2022, an increase of 6.5% over 2021. In 2022, the company’s operating margin was 17.8%, compared to an operating margin of 20.9% in 2021. In 2022, the company recorded a net margin of 14.2%, compared to a net margin of 17.2% in 2021.
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