Netflix subscribers sharing log-in details with friends could hinder the growth of the company in the near future. Although the performance of the company has been top notch to date, with shares witnessing an 82% increase in 2015, a problem is beginning to take shape that could have serious implications for the company moving forward.
Quarterly growth declining
A recent report from Seeking Alpha shows that since 2013, quarterly growth for Netflix has dropped roughly 10% in two years. The report also discusses that most subscribers share Netflix’s log-in information with people other than their family members. In other words, this suggests that a lot of people are inclined to use Netflix for free, which could in turn affect the future growth of the company.
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Normally, sharing log-in credentials with a friend or two is not that big a deal. But if every subscribers shares his/her password, this would amount to 62 million free users of Netflix. Moreover, at $8 per month, this would mean that the SVOD service is losing as much as $496 million every month, says the report.
Apart from users sharing passwords, the decline in Netflix’s user growth might have been caused by some other factors as well. One of them could be the growth of Netflix Instant that allowed millions of users to subscribe in a very quickly. As there are only finite US citizens, the availability of new subscribers is obviously going to decrease.
Netflix must step in to check sharing
At the same time, Netflix is much bigger now than it was a few years ago and its stock price is reflecting that. Recently, in an attempt to boost its growth, the streaming service introduced several new features, including a Netflix app for pay TV providers. Moreover, the company is planning to expand its services in China to support its global expansion.
Global growth notwithstanding, the preference of people to use Netflix for free poses a huge problem as this undermines the whole system. To restrict this, Netflix has limited the number of people that can use the streaming service at the same time. This prohibits multiple people from using a single Netflix account simultaneously. While this is a step in the right direction, the log-in sharing problem has not been effectively dealt with yet.