- Netflix to implement password-sharing fees to US customers this summer
- The company has also announced that it was permanently ending its original business of renting out DVDs
- The decision to add fees for sharing passwords came after a test conducted in Latin America last year
Netflix enters a new era as it plans to implement an added fee for password-sharing with people outside of a subscriber's physical household. It will permanently end its original business of renting out DVDs.
The move to limit the number of people sharing their accounts with others comes after the company conducted a test of its account-sharing fees last year in Latin America. Earlier this February, Netflix officials implemented the new policy in four regions, including Canada and Spain.
Netflix Password Sharing Fees
The new changes mean that subscribers living in the United States can expect to be affected by password-sharing fees by the end of June later this year. As per CNET, the decision was announced in a letter sent to shareholders on Tuesday.
The policy shift will require subscribers to pay for each sub-account connected to their main account if people outside their physical households are using them. Additionally, for subscribers living in countries where paid sharing is already implemented, only those with Standard or Premium plans will be allowed to add extra accounts, up to a maximum of two per account.
On the other hand, users outside a paying member's household cannot access the platform. They will be required to open their accounts and will be given the option of transferring their original profiles.
In Canada, where the new policy has already been implemented, the company said it had a larger paid subscriber base compared to the launch of paid sharing. It noted that that number is continuously growing.
Will Netflix's Original DVD Rental Business End?
On top of the new password-sharing fees, Netflix's original business, renting out DVDs, is officially shutting down. Engadget said the company announced the move by saying it would "wind down" rentals, specifically DVD.com, and will mail its last movie discs on September 29.
The main reason for the transition, the company said, was simply that it was becoming increasingly more difficult to offer the quality of service that it wanted due to the diminishing demand for physical rentals.
The first disc that Netflix shipped out was Beetlejuice, which was back in 1998. The company has since mailed more than 5.2 billion movies inside its signature envelopes and delivered them to almost 40 million customers.
The move also comes as streaming has become a dominant part of Netflix's profit model based on its earnings report for the first quarter. This comes as the company drafted off a strong fourth quarter, where it revealed that it added 7.7 million subscribers.
According to the New York Times, Netflix noted that revenue rose by 4% compared to the previous year to $8.1 billion and added that its profit was at $1.3 billion.
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