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Friday, December 1, 2023

Netflix’s password sharing crackdown to hit Korea

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Netflix's headquarters in Hollywood, California [AFP/YONHAP]
Netflix’s headquarters in Hollywood, California [YONHAP]

Netflix’s crackdown on password sharing is making its way toward Korea, with a growth in both revenue and subscriber numbers that the streaming giant credited to the rollout of paid sharing that kickstarted this year.

“We expect revenue growth will accelerate in the second half of 2023 as monetization grows from our most recent paid sharing launch and we expand our initiative across nearly all remaining countries,” Netflix said in its shareholder letter last Wednesday.

When Netflix’s co-CEO Ted Sarandos visited Korea last month, he did not give an exact timing for when the new account-sharing method will be applied in Korea but said there were no changes to the policy that will eventually be implemented globally.

Netflix has been rolling out a new paid-sharing policy in several countries since February that charges extra monthly fees for accounts shared outside of the same household.

Despite the huge consumer backlash the streaming platform has received since its announcement of this new policy last year, Netflix says that the policy has stabilized to the point that there are more signups than cancellations in some 100 countries including the United States. Netflix’s chief financial officer Spencer Neumann also said during a recent conference call that the majority of the company’s revenue growth this year will be “largely driven” by the company’s new paid memberships.

Netflix gained 5.9 million net subscribers globally in the second quarter, while revenue grew 3 percent on year to $8.2 billion.

Domestic streaming services do not have any immediate plans to follow Netflix’s lead but will closely monitor how the platform reaps profit and if the policy can be adapted to their business models.

“The domestic streaming market is keeping an eye on Netflix’s moves, but that’s about it,” a spokesperson for a streaming service, who wished to remain anonymous, said. “The market pie for domestic services is small compared to Netflix, and we cannot just push ahead with a new policy without considering domestic consumer sentiment because they are our direct market base, regardless of the new model’s profitability.”

Netflix is also pushing ahead with its fledgling ad business and has applied a new ad-supported subscription model globally since last November. It has also removed its cheapest ad-free subscription membership in the United States and Britain since last week in a move to draw more users to its ad-supported tier.

In May, the company said the ad-supported tier had reached nearly 5 million active users per month, but said in its recent quarterly letter to shareholders that ad revenue “isn’t material” for Netflix yet.

BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]