Netflix will roll out its paid password-sharing options across the US over the next two months. Wall Street investors are excited and cheering on the move.
According to Netflix, over 100 million homes utilise the service without paying. Netflix began enforcing password-sharing restrictions in four additional countries earlier this year. Following a series of trials and testing in South America and Canada, the business believes it has a decent grip on a launch in its largest market: the United States.
Netflix had planned to implement password-sharing enforcement measures in the first quarter. Still, a surge in customer reaction in the United States forced the firm to postpone its implementation. Netflix said it would resume a broad rollout of its paid account-sharing option in the second quarter after delaying it in the first.
Password sharing should be a key growth driver for Netflix’s business, with the potential to increase subscriber numbers and monetisation potential.
Users must set a location for their membership, determined by the household’s IP address. Any attempts to access the account from outside the authorised location will be unable to do so. Netflix will offer a password-sharing program, allowing outside users to join the account for a fee.
However, Netflix has also created a variety of subscription tiers with varying prices for those consumers who may now need to start paying their own way. This includes a $7-per-month advertising-based subscription, and it anticipates the combination of an ad-supported tier and password-sharing safeguards to assist in raising growth and the stock price.
As disclosed in the company’s most recent financial report, the delayed timeframe may have exacerbated its difficulties in building its subscriber base during the March quarter. The business reported a net growth of 1.75 million global streaming users, up roughly 5% from last year but less than the more than 3 million projected by Wall Street analysts.
Netflix reported a 4% increase in revenue for the quarter, but its quarterly income fell 18% to $1.3 billion. This was a crucial quarter for the company to seek new revenue opportunities, as it experienced a major selloff due to the cancellation of 200,000 subscribers in the year-ago quarter.
Both Bank of America and JPMorgan confirmed their “buy” ratings for the company, with price targets of $410 and $380, respectively, implying a possible 28% upside from current levels.
