After years of letting the widespread client behavior slide, Netflix is now trying to crack down on password sharing after a less-than-stellar earnings report.

In its quarterly letter to shareholders on Tuesday, Netflix reported that, for the primary time in round a decade, it had misplaced subscribers, roughly 200,000 over the course of the primary quarter of 2022, CNN reported. The streaming trade titan had been projected so as to add round 2.5 million subscribers in the identical time interval. It now initiatives that it'll lose round 2 million extra within the second quarter, although this may be an effort to maintain expectations low.

Because of this information, Netflix's inventory worth dropped by as a lot as 25 % in after-hours buying and selling, with the corporate's worth down by round 40 % throughout 2022. Among the many fixes going ahead, the corporate advised buyers that the corporate plans some form of technique for cracking down on password sharing, in keeping with CNBC.

The corporate at the moment estimates that round 30 million households within the U.S. and Canada are utilizing borrowed passwords to entry its platform, with an extra 100 million estimated in each different nation the place Netflix operates. Netflix CEO Reed Hastings wrote that the corporate tolerated the widespread observe as a method to get viewers into the Netflix system, however now with subscriptions waning, it has to search out methods to handle the difficulty.

netflix reed hasting password sharing
Netflix introduced on Tuesday that it'll look right into a method to crack down on password sharing after reporting a lack of subscribers. Above, CEO Reed Hastings is seen at an organization occasion.Ernesto S. Ruscio/Getty Photos for Netflix

"Our comparatively excessive family penetration—when together with the massive variety of households sharing accounts—mixed with competitors, is creating income development headwinds," Netflix mentioned in its letter to shareholders. "Account sharing as a share of our paying membership hasn't modified a lot through the years, however, coupled with the primary issue, means it is tougher to develop membership in lots of markets—a difficulty that was obscured by our COVID development."

Whereas nonetheless the trade chief in streaming, since 2019, Netflix has confronted an rising variety of high-profile opponents within the area, vying for a chunk of its success. Now, along with outdated foes like Amazon Prime Video and Hulu, the corporate faces challenges to its subscriber base from Disney+, HBO Max, Apple TV+, Peacock, Paramount+, and extra.

Netflix started testing strategies to curb password sharing in Peru, Costa Rica and Chile earlier this yr, in keeping with NPR. The corporate has not revealed any particulars on the way it intends to confront the difficulty globally, whether or not it's kicking sharing households off accounts or charging accounts additional to share passwords, however did estimate that it'll have a system in place by subsequent yr.

Newsweek reached out to Netflix for remark.