Netflix is plugging password sharing loopholes

Netflix is introducing multi factor authentication (Face ID, etc) tied to individual profiles beginning July 7. They will eliminate the loophole of traveling and SMS codes that has kept password sharing going. Before the first round of password sharing restrictions a few years ago, Netflix had estimated 100 households sharing passwords. If even 10%-30% of those continue to do that today, that’ll mean millions of new additions to its existing 325 million subscribers. This update was picked up by users and the media after Netflix began putting up pop ups asking people to enter an email to their individual profiles. The stock is down and it seems management is working on multiple growth avenues. If this works, then Q3 guidance should easily top estimates. One additional update that’s gone under the radar: Netflix signed up France’s market leading TF1 channels on to its app. It has got 20-something viewers and TF1 has deep local content. It’s a win-win for both sides. Brings in new content and revenue sharing on Netflix at minimal cost I.e. high margin. This is a test case. With cord cutting as a global trend, TV channels have every incentive to sign up with Netflix to gain a new avenue of distribution. It gets them new viewers and gets Netflix more content and revenue sharing. Considering what cable providers and YouTube TV charge, Netflix has a lot of room to run with this strategy.