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Netflix aims to curb password sharing as hundreds of thousands of subscribers turn it off

Netflix, which gained huge acclaim by launching popular series such as Bridgerton and Stranger Things, lost 200,000 subscribers during the January-March period
Netflix, which gained huge acclaim by launching popular series such as Bridgerton and Stranger Things, lost 200,000 subscribers during the January-March period

Netflix suffered its first subscriber loss in more than a decade, causing its shares to plunge 25% in extended trading amid concerns that the pioneering streaming service may have already seen its best days.

The Squid Game streaming service’s customer base fell by 200,000 subscribers during the January-March period, according to a quarterly report released Tuesday.

End of account sharing?

The unexpectedly sharp drop in subscribers has prompted the streaming giant to consider changes to its service that it has long resisted, such as minimising password sharing and creating a low-cost subscription supported by advertising.

It estimates more than 100 million households are breaking its rules by sharing passwords.

Boss Reed Hastings said: “When we were growing fast, it wasn’t a high priority to work on [account sharing]. And now we’re working super hard on it.”

The changes announced late on Tuesday are designed to help Netflix regain momentum it lost over the past year.

Netflix indicated it will expand a trial programme it has been running in Chile, Costa Rica and Peru, where subscribers can extend service to another household for a discounted price.

The firm is also considering offering a cheaper ad-supported tier.

Netflix hopes these changes will help it build on its current 221.6 million worldwide subscribers, but they also risk alienating customers to the point they cancel the service.

Turned off

It is the first time that Netflix’s subscribers have fallen since the streaming service became available throughout most of the world outside China six years ago.

Worse, Netflix is now projecting a loss of another two million subscribers during the April-June period.

If the stock drop extends into Wednesday’s regular trading session, Netflix shares, which are listed on the technology-oriented Nasdaq exchange, will have lost more than half of their value so far this year.

The confirmation of the customer exodus comes as research revealed more than 1.5 million subscription services have been stopped in the first quarter of the year as households take further stock of their spending due to the rising costs of living.

Popular TV, film and music streaming services, such as Netflix, Amazon Prime and Apple+ have been cancelled, according to data analysts Kantar.

Netflix, which gained huge acclaim by launching popular series such as Bridgerton and Stranger Things, recently announced it will be increasing its subscription prices by 17% – another price rise for UK households on top of the already skyrocketing cost of living.

Customer losses

Netflix also lost 800,000 subscribers in 2011 after it announced plans to begin charging separately for its then-nascent streaming service, which had been bundled for free with its traditional DVD-by-mail service.

The customer backlash elicited an apology from Netflix chief executive Reed Hastings for botching the execution of the spin-off.

The service also saw a decline in US subscribers in 2019.

But the latest subscriber loss was far worse than a forecast by Netflix management for a conservative gain of 2.5 million subscribers.

The news deepens troubles that have been mounting for the streaming service since a surge of signups from a captive audience during the pandemic began to slow.

It marks the fourth time in the last five quarters that Netflix’s subscriber growth has fallen below the gains of the previous year.

Now investors fear that its streaming service may be mired in a malaise that has been magnified by stiffening competition from well-funded rivals such as Apple and Walt Disney.

Which are best value for money?

Subscriptions to streaming services in the UK have continued to rise in the past year, with Ofcom reporting nearly half of consumers (48%) now use them as their main way of watching TV and film.

The experts at money.co.uk  have also crunched the numbers to work out the average cost per hour of content watched on each of the most popular streaming services.

Netflix came in at 34p an hour, Amazon Prime Video 25p, Now TV 31p, Disney Plus 25p, Apple TV Plus 15p and BritBox 18p.

James Andrews, senior personal finance editor, money.co.uk, said: “Streaming services hit a record high during lockdown, with 12 million of us signing up for a new service in 2020.

“Given the rising cost of living it’s more important than ever to make sure we’re spending our cash wisely.

“Services across the board are raising their subscription fees, so it’s worth knowing all the tips and tricks of streaming to get the most out of your money.”

Take advantage of free trials

Mr Andrews added: “The best way to try a new platform for the first time is by signing up for free, prior to making a financial commitment.

“Most services offer free trials to lure in new subscribers and you can usually cancel anytime.

“What’s more, some phone or broadband contracts offer extended free trials to new customers.

“For example, O2 customers can get six months free of Disney Plus, while most new Apple products come with three months free Apple TV.”

When it comes to reduced rates, some streaming platforms will offer a discount if you try to cancel your subscription – even if it’s just a free trial.