Last month we shared some interesting insights and data around Netflix and the video streaming industry. Leveraging our Longitudinal Survey Product that tracks industry trends over time as well as data from our transaction-verified panel, we crowned Netflix as the most popular video streaming service among consumers (check it out here!). Despite recent price increases (January 2023) Netflix continues to be successful because of the quality and diversity of its original content. 

Netflix’s upcoming prevention of password sharing, which began in Q1 2023, is a looming issue for the company. As part of this change, Netflix will ask for an additional fee for friends and family who share an account and are not living with the account holder. Drop conducted further research to understand the consumer sentiment towards this change from Netflix, and the results suggest the ramifications could be costly for the company.

Favorite Streaming Provider
Netflix
Disney+
Huhu
Apple TV+
Peacock
Paramount+

Drop Market Research Solutions, Feb. 24, 2023, 2,000 US respondents.

The majority of Netflix users are unhappy with the password-sharing crackdown and are unlikely to pay for additional subscriptions. 

A survey with 2,000 Netflix users recorded 63% as account holders, and 37% sharing an account with family, friends, or roommates. Just over half (51%) of the respondents disagreed with the password-sharing crackdown. This percentage increases to 58% for users who share an account and would obviously be significantly impacted by the change. 

It looks as though Netflix will miss out on a lot of potential subscribers, as 57% of the respondents are unlikely to pay for an additional subscription. The additional asking price is potentially where Netflix needs to adjust as 54% of respondents would only pay $5 or less, and the Netflix pricing looks to be higher than that in most regions. 

Likelihood to Pay for an Additional Subscription


Amount Willing to Pay for Additional Account

Drop Market Research Solutions, Feb. 24, 2023, 2,000 US respondents.

Nearly half of the Netflix users surveyed would consider canceling their subscription as a result of the password-sharing crackdown, and with lots of strong competition, this is a serious threat to Netflix. 

Of the total respondents, 48% are likely to cancel their Netflix subscription as a result of the password crackdown. This percentage goes up to 63% for those who are currently sharing an account as this group is impacted the most. When asked which streaming providers they would switch to, Hulu had the majority of the vote (68%) and from the previous research, Hulu looks to be one of Netflix’s strongest competitors. These results suggest that the Netflix password crackdown could create opportunities for competitors to fight for more market share. 

Likelihood to Cancel Subscription After Password Crackdown

Drop Market Research Solutions, Feb. 24, 2023, 2,000 US respondents.
Which Streaming Provider Would You Switch To?

Drop Market Research Solutions, Feb. 24, 2023, 2,000 US respondents.

The negative reaction from Netflix users in response to the password crackdown is also leading to concerns for future subscriber and revenue forecasts. 

Over 80% of the survey respondents believe that the Netflix password crackdown will have an impact on the company’s subscriber numbers. Given that sharing accounts is a common practice among Netflix users, the potential loss of subscribers would no doubt have a major impact on the company’s revenue. It remains to be seen how Netflix will address these concerns and mitigate any potential impact on its business, but it’s clear that the company needs to take steps to reassure users and maintain its subscriber base.

Will Password Crackdown Impact Subscriber Numbers?

Drop Market Research Solutions, Feb. 24, 2023, 2,000 US respondents.

So what happens next?

From the findings above, it is safe to say that Netflix users are not happy about the imminent password crackdown. The change is considered unfair, particularly if users are on a tight budget and cannot afford to pay for individual accounts for all family members. As Netflix navigates the next few months, it will be crucial for the company to understand and accommodate subscriber needs and preferences where possible. With more accurate member data, the password crackdown provides a great opportunity for Netflix to effectively invest in more outstanding original content.

Netflix Originals Covers

Will the improved content outweigh the severely negative user sentiment and continue to be the factor that keeps Netflix ahead of the streaming provider pack? That’s the question Drop will look to answer when we next consult our streaming provider Longitudinal Survey and future research projects!


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