Netflix Signals Expanding Crackdown On Account-Moochers, Mulls Ads

LOS GATOS, CA — Netflix signaled it may expand its crackdown on account moochers across the globe and even test Hulu-style ads amid a sharp drop in subscribers and free-falling shares.

Netflix lost 200,000 subscribers during the January-March quarter, according to The Associated Press. The fall represented the company's first decline since Netflix became available globally other than in China six years ago. Netflix lost 700,000 subscribers when it withdrew from Russia to protest its war against Ukraine, and it expects to lose another 2 million subscribers this quarter as more streaming services gain momentum, including Apple TV and Disney+.

The Los Gatos, California, company's stock fell as much as 37 percent by noon Wednesday. It estimated about 100 million households watch its service for free by using someone else's account, AP reported. That includes 30 million in the United States and Canada.

"Those are over 100 million households already are choosing to view Netflix," Netflix CEO Reed Hastings said. "We've just got to get paid at some degree for them."

CNBC reported that Netflix acknowledged in its quarterly shareholder letter that it deliberately turned a blind eye to password sharing to get more people using the service.

But the service said it now faces "revenue growth headwinds" amid relatively high household penetration and increased competition.

“Account sharing as a percentage of our paying membership hasn’t changed much over the years, but, coupled with the first factor, means it’s harder to grow membership in many markets — an issue that was obscured by our COVID growth," Netflix said in the letter.

Last month, Netflix said it wouldn't ban password sharing, NPR reported.

Instead, as Los Gatos Patch previously reported, Netflix said it would roll out a test feature in Chile, Costa Rica and Peru that would allow members on standard and premium plans to add sub-accounts for up to two people who live elsewhere for a small fee.

Now, Netflix indicated it will expand that trial program. It didn't immediately offer additional information about how a cheaper, ad-supported service tier would work — or how much it might cost.

Netflix ended March with 74.6 million subscribers in the U.S. and Canada.

This article originally appeared on the Los Gatos Patch