SAN FRANCISCO — An unexpected drop in subscribers sent Netflix shares into freefall, forcing the company to consider experimenting with ads and — hold onto your remote — cracking down on millions of freeloaders who use passwords shared by friends or family.
The surprising net loss of 200,000 subscribers rattled investors, who had been told by the company to expect a gain of 2.5 million subscribers. Netflix shares sank 35% on the news, falling to their lowest level since early 2018.
The Los Gatos, California, company estimates that about 100 million households worldwide are watching its service for free by using the account of a friend or another family member, including 30 million in the US and Canada.
“Those are over 100 million households already choosing to view Netflix,” CEO Reed Hastings said recently according to AP. “We´ve just got to get paid at some degree for them.”
That may not hurt much at first. Netflix has already been experimenting in Latin America with programs that use a soft touch to convince the unsubscribed to sign up.
In Costa Rica, for instance, Netflix plan prices range from $9 to $15 a month, but subscribers can create sub-accounts for two other individuals outside their household for $3 a month.
Hastings suggested that the company may adopt something similar in other markets.
Some current subscribers, though, say even that relatively gentle nudge might push them to sign off.
Alexander Klein, who lives near Albany, NY, has subscribed to Netflix since 2013 and shares his account with his mother-in-law.
While he likes the service, a string of price increases and the loss of licensed shows has annoyed him – and any password-sharing crackdown might be the last straw.
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