The turning point comes when the company soon finds whether or not the brand can survive and maintain dominance in this streaming market where choice seems to be unlimited. On Tuesday, Netflix will begin enforcing its password-sharing limits worldwide, including in the United States, after years of promoting the practice as a way to get its service into more consumers' homes. Today, though, moochers are just lost revenue, and Netflix estimates that 100 million households around the world are sharing user accounts - 30 million in the United States and Canada.

To a degree, consumer pushback against the crackdown has to do with Netflix's complete reversal on its stance regarding password sharing. At one point, the company believed people who benefited from a shared password would eventually convert to become a Netflix member — but that hasn't always proven to be true.

In 2016, then-Netflix CEO Reed Hastings told reporters the company loved that people were sharing Netflix with family and friends, calling it a "positive thing.".

"We love people sharing Netflix whether they are two people on a couch or 10 people on a couch," he said. Hastings also likened subscribing to Netflix as just another coming-of-age milestone for young adults, adding that "as kids move on in their life, they like to have control of their life, and as they have an income, we see them separately subscribe. It really hasn't been a problem."

As recent as last year, the media service even tweeted: "Love is sharing a password" — a tweet that people have dug up in order to protest about Netflix new rules on password sharing.
This change of stance about the sharing of passwords partly came about as Netflix finds the competitive landscape in the market. Where Netflix was the holy grail for cord-cutting consumers, today consumers get to choose from multiple offerings, including those touting large IP libraries, including Disney+, those providing consumers with access to live channels, including Hulu, and those simply offering must-watch content like HBO Max, rebranding itself as Max of late. The latter uses pop culture phenomena, the latest being "Succession," which has proven more addictive to its viewers following in the footsteps of that earlier hit, "Game of Thrones.".

And then there are other large services available to streamers through NBCU's Peacock (now part of the new NOW TV that Comcast recently launched) or Paramount+, which will combine with Showtime, as well as free streamers Xumo, The Roku Channel, Amazon Freevee, Pluto and others for value-conscious customers.

More critically, there is a generation of young people who no longer spend as much time viewing television as their parents spend. Instead, they now scroll through other entertainment applications such as YouTube and TikTok. A study on how kids and teens use apps shows that kids and teens age 4 through 18 spent an average of 67 minutes per day using YouTube, compared to a mere 48 minutes Netflix. But the report says that TikTok had even taken more of their time, with 107 minutes on average per day.

If free content that is created by a world of largely unpaid content creators happens to be more interesting than scripted, well-crafted shows and films that take millions of dollars to produce, Netflix is not the only streamer that may be in trouble here. No wonder that it is grasping any lost dollars.

The more the competitive concerns over which the firm has taken considerable amount of time in understanding; notwithstanding, in recent times, it has produced excellent series, including "Squid Game," "Wednesday," "Stranger Things," "Bridgerton," "The Crown," "Emily in Paris," and "Love is Blind," all of which reached cultural touch point. However, as said, last year while consumer subscription numbers declined the firm admitted that it would need to generate more adored series and films besides releasing hits regularly enough.

The second is the risk it poses to Netflix regarding its catalogue composition. One other component that made Netflix a need-to-have sometime in the past was the breadth of its available content, the back catalogue and the hit films. It suffered some last year with the rights holders pulling out some of the best fare to bolster up their operations. While the key IP went, so did some of the older, less-understood content that, for the most part, users actually used the service for, like comfort TV and background viewing.
Surprisingly enough, what was mostly streaming on Netflix were people's favorite comfort shows — "The Office" and "Friends," for example.

The Office, for instance, was the most popular show on Netflix but moved to NBCU in 2021. Friends went to Warner Bros. in 2020. To replace these voids, Netflix acquired the rights to Seinfeld in 2021, but aside from a modest Top 10 premiere, it never again returned to the Top 10 and has not returned.

Also risky is the timing of the crackdown: Economic uncertainty and post-COVID readjustments have driven high prices for food, gas and rent, which places consumers tighter against their wallets — and dumping unnecessary subscriptions. As The Wall Street Journal reported in April. Cancellations of premium streaming services in the U.S. -- which include Netflix and Hulu -- rose 49% last year compared with a year ago, according to a report citing data from Antenna.

Netflix has stated that its crackdowns on password sharing would lead to cancelations -- and those are only a temporary loss of subscribers, at that. The company, however, hasn't proven that theory yet here in the United States.

During its first-quarter earnings, Netflix co-CEO Greg Peters said the results of the crackdown in the first test markets looked much like how subscribers reacted to price increases. It found that some moochers would sign up for their own accounts or people would pay for the extra members — like parents, perhaps, supporting their adult children living outside the home.

It would still be too early to say how this approach will bear fruit in the U.S. and other markets. As Netflix failed to win the expectations at Wall Street regarding adding subscribers by netting up only 1.75 million subscribers, with an increase of only 5% year over year; analysts have projected this to stand at around 3 million.

As far as implementation of this crackdown on password-sharing practice in the U.S. and the rest of the markets, there are apprehensions among most about the details that Netflix plans to put into the implementation process. How does this penalize someone who lives out of a suitcase? Like, a traveling artist? Or a family who often goes on vacation? A second home, such as a beach house that one visits regularly? Why can't college kids just be a screen, not a moocher?

Netflix lists rules and exemptions to prevent account sharing outside household

It has not been very informative on how it's trying to address the carve-outs by noting only that people traveling won't have an issue accessing the service while traveling with a device from their household. Other times, it requires that users verify they're traveling-a system that consumers panned for being an imposition, especially for a paid service where regional sports, which have to be tied to geolocation, aren't being offered.

While Netflix doesn't have a reason to make things harder for consumers to stream its service, the threat of those challenges haunts consumers' minds — and perhaps their wallets, as well.