BEIJING, April 19 (TMTPOST) — Streaming service provider Netflix has warned that it might crack down on account sharing behavior among its users after admitting that the platform suffered from user loss for the first time in a letter to shareholders.
The company estimated that its user base will further decline to 219.64 million next quarter from the current 221.64 million.
The streaming giant attributed the user loss to its past success in the market and existing competition. “Our relatively high household penetration - when including the large number of households sharing accounts - combined with competition, is creating revenue growth headwinds,” Netflix wrote in the shareholder letter.
Netflix also estimated that on top of its more than 222 million paying subscribers, an additional 100 million households are enjoying Netflix content via account sharing, which contributed to the losses. In response, the company said that they are working on the “monetization of multi-household sharing.”
In the letter to shareholders, Netflix admitted that it purposefully turned a blind eye to account-sharing among users because the company believed that it could drive more users to its service. But the increasing competition in the market is nudging Netflix to monetize from households that are using others’ Netflix accounts.
"Sharing likely helped fuel our growth by getting more people using and enjoying Netflix. And we"ve always tried to make sharing within a member"s household easy, with features like profiles and multiple streams," the company said. "While these have been very popular, they"ve created confusion about when and how Netflix can be shared with other households."
Netflix’s shares tanked more than 25% in after-hours trading following the release of the results, after closing with a 3.2% increase at US$348.61.
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