Last month, Netflix started testing to charge subscribers who are sharing their passwords with people outside their households. The company is serious about it as it aims to boost profitability, in a letter to its investors. Netflix reported a decrease in paying subscribers, resulting in a drop of 26% in its stock.
According to Netflix, there are around 100 million households using other households' accounts. Netflix has reported that around 200,000 users have left the service by the quarter and it expects the situation will continue with about 2 million subscribers leaving, but believes that subscriber growth will resume in the second half of the year.
With the loss of the number of subscribers for the first time in a decade, the company is considering introducing a cheaper subscription tier with ads. Reed Hastings, Netflix CEO said he's against "the complexity of advertising" and is for "the simplicity of subscription", and is "a fan of consumer choice."