Here’s Why Netflix’s Password Crackdown Is Backfiring

The Netflix  (NFLX) – Get Free Report crackdown is finally here.

Or to be more precise, the Netflix password crackdown has reached the U.S. after first getting beta tested in several other countries including Spain, New Zealand and Canada .

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Recently, American users who share a password “outside their household” have received an email about the company’s updated policies. If you have the $15.49 per month Netflix Standard plan, you can add one extra member who can use the service outside your household for an extra $7.99 each month. If you use the The Netflix Premium package with 4K streaming, which costs $19.99 a month, you can add up to two extra members for $7.99 each.

The move is widely seen as a response to the company’s tough 2022, which saw the once invincible streaming giant lose customers for the first time ever, prompting a sharp slide in the stock. Netflix had been a huge beneficiary of the pandemic, as people forced to live and work at home spent more time streaming shows and movies to pass the time.

Younger Viewers Are More Likely to Cancel

But there’s already evidence the crackdown is not going over well with Zoomers and Millennials. New data from data from Samba TV suggests these key groups are likely to cancel their memberships in response to the password sharing crackdown.

Survey and data analysis from Samba and HarrisX found that 52% of Gen Z and 51% of Millennials would cancel their Netflix account if they were banned from sharing passwords with people outside of the household. By comparison, only a quarter of Gen X and Baby Boomers responders indicated they would quit the service.

In total, Samba’s data found that 37% of current Netflix subscribers would cancel in the face of a password sharing crackdown.

Samba TV’s survey found that among those who currently use someone else’s Netflix account, 64% would be up for subscribing if they couldn’t use another person’s password, including 76% of Millennials that said the same. 39% of the password-moochers said they’d take the $7 per month ad-supported tier and 25% would subscribe to an ad-free tier.

Similarly, Samba TV CEO Ashwin Navin, highlighted that Netflix is nudging subscribers to its ad-supported tier.

“Data from Samba TV and HarrisX shows the crackdown on password sharing has the potential to hasten the growth of Netflix’s ad-supported tier as sharers are gently forced to migrate to their own accounts,” Navin said in a statement.” Of those who currently use someone else’s Netflix account, almost 40% say they’d move toward the cheaper monthly subscription with ads, while only a quarter may sign up for their own ad-free experience

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