Netflix, originally a DVD rental service, has evolved into a global streaming giant with over 247 million subscribers by eliminating late fees and pivoting to on-demand video streaming. Facing challenges from password sharing, Netflix is implementing strategies like account verification and the introduction of paid sub-accounts to curb account sharing and boost revenue. These measures have already shown positive results, with the company adding 600,000 subscribers in the second quarter of 2023.

1. Cracking the code:
Netflix’s strategies to tame password
sharing
By Archana

2. Netflix: From Selling DVDs to Global
Video Streaming Giant
• Mailing movies: Netflix was founded in 1997 as a
DVD by mail service, transforming how people rented
movies. By offering unlimited rentals for a flat fee
and eliminating late fees, Netflix disrupted the
traditional video store model.
• Video streaming takes center stage: In 2007, Netflix
pivoted to streaming; offering a vast library of movies
and TV shows on demand, forever changing how we
consume entertainment.
• Global entertainment powerhouse: Today with over
247 million subscribers worldwide, Netflix is now a
leading entertainment provider. They produce award-
winning original content, acquire popular shows and
movies, and constantly innovate to keep viewers
hooked.

3. The password sharing problem and
more…
• Negative impact on revenue: Netflix estimated over
100 million households worldwide are using shared
accounts and hence cracking down on password
sharing would be a “ big opportunity” for revenue
growth
• Decline in subscriber base: In 2022, it had lost
around 200,000 subscribers, prompting many to
wonder if Netflix’s golden era as an undisputed
leader in video streaming was over

4. Strategies to curb password sharing to boost revenue (1/2)
Account verification:
• Netflix is able to use information such as IP addresses, device IDs and account activity to detect whether
devices are being used within the same household
• If they find any issue with any device using single account, the account holder is to be notified ( via
registered email, phone numbers)
• According to Netflix, primary account owners, and those who live with them, should be able to access their
account without any verification while traveling. However, if the user is away from their household for an
extended period of time, they may be occasionally be asked to verify their device.
• All in all, It has restricted the usage to a single household. Devices logged in with different IP addresses other
than the household will either be logged out or need to purchase their own membership for the account.

5. Strategies to curb password sharing to boost revenue (2/2)
Paid account sharing:
• Sub-accounts/ buy an extra member option: Allows its subscribers to add upto two extra members to their
accounts for an additional fee
• Transfer profile option: If you have someone using your Netflix account outside your household, you can
transfer your profile to a new membership account that they have paid for
All in all, this strategy will increase the number of subscribers for the company

6. The result
• As of second quarter of 2023, 600,000 Netflix subscribers
have been added globally i.e 3 times more than Wall Street’s
expectations.
• While the future of password sharing remains uncertain,
Netflix's proactive strategies demonstrate its commitment to
protecting its business model while offering users a valuable
and personalized streaming experience

7. Thank you for
watching