Netflix rolling out its password-crackdown in South Africa.

by Thinus Ferreira

Netflix has started to roll out the video streaming service's password crackdown in South Africa as part of its ongoing plans to try and convert content leechers globally to content payers.

In its latest quarterly report, Netflix noted that its password crackdown initiative it first started to test last year, is now truly going global since this week.

Netflix started its password crackdown - a process it calls "paid sharing" - across South American countries like Chile, Costa Rica and Pery last year, and followed it up in February this year by expanding it to Canada, Portugal, New Zealand, Spain and since May in the United States. 

Now it will be rolled out to virtually every other country Netflix is available in.

Netflix says it netted an additional 6 million subscribers in the quarter at the end of June and that a lot of the additional new subscribers are people it managed to convince to switch to pay for their own Netflix accounts after having borrowed and used the login details of family and friends.

Netflix's big rival in South Africa, MultiChoice, started its own password crackdown initiative in March last year by suddenly limiting DStv subscribers to just one online watch stream from an account. 

This move which was beset with technical problems was met with heavy criticism and backlash by DStv subscribers with MultiChoice that later last year said it was working on some corrections and changes. By mid-2023 no changes to the single concurrent DStv stream has yet been announced or implemented.

Netflix uses a combination of checking for IP addresses and device ID details to determine whether various Netflix account logins are coming roughly from the same location, meaning the same household.

In its Q2 quarterly report, Netflix notes that it will now be expanding its password crackdown initiative to "almost all" of its remaining countries, saying that "we're rolling out paid sharing to almost all of the remaining countries".

Netflix password crackdown: millions cancel.

by Thinus Ferreira

Netflix's password crackdown to try and covert non-paying users by forcing them to become subscribers is having the opposite effect, with millions who have cancelled and who are no longer watching the video streaming service's content.

In an ominous warning of what might happen in South Africa and across the rest of Africa later this year when Netflix's password crackdown process starts in the continent, millions of users in Spain have cancelled and opted out of further watching Netflix, instead of paying.

According to latest market research from the market research firm, Kantar, more than a million Netflix watchers have cancelled and abandoned the streamer just in Spain in the first quarter of this year as part of a huge backlash, after Netflix started to implement its password crackdown that it calls "paid sharing plans".

"The instant effect is that fewer eyes are on the screen for Netflix," Kantar states, noting that there's been an "outright rejection of the password sharing clampdown".

"In a worrying sign for the next quarter, 10% of remaining Netflix subscribers say they plan to cancel their plan in the second quarter of 2023, which is well above the average seen in previous quarters."

Dominic Sunnebo, global insight director at Kantar's Worldpanel Division, says "There are of course inherent risks with clamping down on password sharing, particularly when back in 2017 Netflix was seen to be actively encouraging it".

"Some users were expected to be lost in the process but losing over 1 million users in a little over a month has major implications for Netflix and whether it decides to continue with its crackdown globally."

Earlier this month Netflix in its latest quarterly report said that it is going to delay and push back its password crackdown rollout in the United States to the second quarter of this year.

Netflix started its password crackdown across South American countries like Chile, Costa Rica and Pery last year, and followed it up in February this year by expanding it to Canada, Portugal, New Zealand and Spain.

Netflix admitted in its quarterly report that it is seeing a "cancel reaction" as subscribers drop the service, and as those who've shared login details don't sign up as paying subscribers themselves.

The Netflix rival MultiChoice embarked on its password crackdown initiative in March 2022 - limiting DStv subscribers to just one online watch stream from an account. 

The move which was haphazardly done with technical problems, was met with heavy criticism and backlash by DStv customers with several who said they're cancelling since they can't make proper use of the pay-TV service as a family.

Later in 2022, MultiChoice announced that it was rethinking and retooling its password crackdown and household sharing strategy and would be announcing changes but no changes have been made over the past year.

Netflix says it uses a combination of checking for IP addresses and device ID details to make a determination of whether account logins are coming roughly from the same location, meaning the same household.

If users share their Netflix login details, in some countries they now have to buy "an extra member" subscription and add it to the account. Netflix has not yet announced when its password crackdown policy will be introduced in South Africa or other African countries.

As Netflix expands its password crackdown the streamer admits that it sees 'a cancel reaction'.

by Thinus Ferreira

As Netflix expands its password crackdown process to further countries, including soon the United States, the global video streaming service admitted on Tuesday night that there is "a cancel reaction" as subscribers drop the service, although some account borrowers are moved to sign up for their own accounts.

In its first quarter 2023 earnings report released on Tuesday night, Netflix said that it is expanding its password crackdown initiative to further countries during the second quarter (April to June) of this year, and implementing what it has learned from the process in countries where it has cracked down on password sharing so far.

In order to try and boost revenue as the global acquisition of streaming subscribers for all streamers are slowing, Netflix is blocking devices where the streamer believes that a Netflix-subscribed household is sharing passwords outside of family members, forcing them to sign up for their own accounts. 

In January Netflix said that it believes password sharing is taking place through at least 100 million of Netflix households.

"In the first quarter we launched paid sharing in four countries and are pleased with the results. We are planning on a broad rollout, including in the United States in the second quarter" and in the vast majority of countries where it's operating, Netflix said in its Q1 shareholder letter.

Netflix started with password crackdown testing last year in the Latin American countries of Chile, Costa Rica and Peru, after it introduced its password crackdown process - something it calls "paid sharing" in February in Canada, New Zealand, Portugal and Spain, and admitted that the step leads to an increase in the volume of Netflix subscribers who cancel every quarter.

"As with Latin America, we see a cancel reaction in each market when we announce, which impacts near-term member growth," Netflix stated in its first quarter shareholder letter, noting however that "as borrowers start to activate their own accounts and existing members add 'extra member' accounts, we see increased acquisition and revenue."

"With each launch, we learn more about how best to roll out these changes and what matters to members the most, in particular maintaining travel/watching on the go and the ability for people to better control access to their accounts as well as transfer profiles to separate accounts."

Netflix said it "found enough improvement opportunities in these areas to shift a broad launch to the second quarter to implement those changes" and that "Longer term, paid sharing will ensure a bigger revenue base from which we can grow as we improve our service".

Greg Peters, Netflix co-CEO, in the first quarter earnings video, said that "Obviously we tested different pricing in these last rollouts than we tested in Latin America and that gives you a sense about how we're thinking about what is optimal pricing, especially in more affluent countries".

Netflix rival MultiChoice started its own password crackdown process in March 2022, limiting DStv subscribers to just one online watch stream from an account, in a move that was met with heavy criticism and backlash by customers. 

Later in 2022, MultiChoice said it had been rethinking its password-sharing strategy but the Randburg-based pay-TV operator is yet to introduce or announce any changes.