Netflix’s Password Sharing Crackdown Hurt The Company in Australia, Study Says




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Netflix is losing subscribers in Australia after its crackdown on password sharing began earlier this year, according to research firm Telsyte shows this may not be the only contributing factor.

The Telsyte Australian Subscription Entertainment Study 2023 report shows subscriber growth has slowed down over the past year partially due to the increased cost of living. In June, Netflix saw a decline in Australian subscribers for the first time, partially due to backlash from Netflix banning password sharing, according to the study. Over the last twelve months, Netflix lost 7% of subscribers, citing the ban as the deciding factor.

The results illustrate the fine line streaming services must walk when dealing with the issue of password sharing. Netflix’s rollout of this policy initially fueled backlash, even if it saw growth shortly after as banned viewers signed up for new accounts. But the study shows there’s a risk that other streaming services, which have hinted at their own crackdowns, will need to avoid.

The study estimates one in three streaming video subscribers share their services, and more than 80% will continue to do so on streaming platforms that still allow this. Although Netflix enables account holders to add additional members outside their household for a fee, 80% of Australians Telsyte surveyed said they would stop sharing accounts entirely if required to pay for the privilege. Telsyte said Netflix’s subscriber cancellations exceed the number of those signing up for the extra member plan.

Although members responded with criticism for blocking password sharing, there’s more to the drop in subscription numbers than that. Netflix put binge-watching on the digital map by releasing entire seasons of a show at once instead of the traditional weekly format. This was a hit with audiences for years, but the Telsyte report hints binge-watching could be losing its novelty appeal. Subscribers across all streaming platforms are looking for quality programs over quantity. 

In addition, approximately 66% of participants want to watch more locally produced content featuring Australian stories, voices, cultures, and values created by local talents.

The Telsyte report shows members have little brand loyalty toward streaming platforms and are willing to cancel memberships in favor of competitors offering better selection. Australians are also gravitating towards free streaming services, which gives the option to watch a lot of the same content. More than 60% of the participants said free ad-supported platforms cover all their entertainment needs.

Even though Netflix saw a 3% decline in new member sign-ups while other platforms, such as Amazon Prime Video and Disney+, saw increases since June 2023, it’s still the leading streaming service in Australia, with 6.1 million members, according to Telsyte.

A Netflix spokesman wasn’t immediately available to comment on the study.

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