In an unpredictable move that has left many users disappointed, Netflix has decided to halt password sharing in India. The multinational company, renowned for its streaming platform accessed by millions of users worldwide, made this announcement on Thursday.
Following the announcement of its June quarter results, Netflix conveyed in a letter to shareholders and during a call with analysts on Thursday that it will no longer provide the “extra member” option in specific markets.
Netflix has taken the decision to discontinue password sharing among users in the region. This move comes after the company implemented price cuts recently, and it aims to prevent users from taking undue advantage of the system, which could potentially lead to revenue loss for the company.
Until now, India and a few other markets, including Indonesia, Croatia, and Kenya, had been exempt from the global restrictions that prevented password sharing. However, that is set to change as the company extends these restrictions to these markets as well.
A calculated effort to increase the subscriber base
Netflix’s recent decision to curb password sharing among users, including friends and relatives, is a strategic move aimed at bolstering its user base. This calculated effort is particularly focused on countries like India, where the youth population is on the rise and there is a growing demand for entertainment services.
By restricting password sharing, Netflix aims to attract more individual subscriptions and capitalize on the increasing demand, potentially leading to substantial revenue growth in the billions.
In India, Netflix’s estimated user base stands at 6 million, which pales in comparison to its competitors such as Amazon Prime Video and Disney+ Hotstar. The primary factor that deterred Indian users from opting for Netflix was its exorbitant pricing for each subscription plan, which cast a shadow over its popularity in the country.
In December 2021, Netflix made significant price cuts to its services in India. The cheapest plan for mobile and tablet viewing now costs Rs 149 instead of Rs 199. The basic plan, which allows viewing on mobile, tablet, computer, and TV, is now priced at Rs 199 per month, down from Rs 499.
The standard plan, offering better video quality and 1080p resolution across all devices, is now available for Rs 499 instead of Rs 649. The premium plan, which provides the best video quality with 4K + HDR, is now priced at Rs 649 per month, down from Rs 799.
After implementing significant price cuts, Netflix witnessed a substantial surge in user engagement, indicating that lower prices successfully attracted a larger number of Indian customers. According to Netflix reports in April, user engagement experienced a remarkable 30% year-on-year (YoY) growth, while revenue growth also saw a notable increase of 24% in 2022, compared to 19% in 2021.
With the removal of the password-sharing option in India and other countries where restrictions have been applied, users will now be required to get individual subscriptions. Reports suggest that Netflix anticipates many of the users who were previously using shared accounts will be willing to subscribe individually. The reason being that the prices for individual subscriptions are not exorbitant, and these users may want to continue enjoying content on the Netflix platform.
