Netflix stock plummets on subscriber loss 1:08
New York (CNN Business) --
Netflix shares plunged this week after the platform reported its first loss of subscribers in more than a decade.
There is one factor that the company pointed to as detrimental to revenue: widespread password sharing.
Does this mean that the entity is about to expel millions of viewers from shared accounts?
Not quite.
But it could mean that Netflix subscribers around the world would have to make an effort to keep their children, friends or colleagues on their accounts.
For years, Netflix has allowed subscribers to share their passwords with little interference.
In fact, the service admitted in its letter to investors on Tuesday that the policy likely helped fuel its growth by "getting more people to use and enjoy Netflix."
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However, that growth has severely stalled, with Netflix saying Tuesday that it is now investigating the "best way to monetize the exchange."
The company noted that of its 222 million paying households worldwide, it estimates that "Netflix is shared with more than 100 million additional households."
Could this be the end of Netflix password sharing?
What does that mean for your account?
It's not clear yet, as Netflix is in the early stages of figuring out how to make more money by sharing accounts.
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Last month, the company said it has been working for a year on ways to "allow members who share outside their home to do so easily and securely, while paying a little more."
Translation: you'll have to pay for those extra people on your account.
The company has launched two test features in three foreign markets called "Additional Member" and "Profile Transfer".
Costs vary based on a number of factors, but Netflix said features can be added for "a fraction of the price of a basic plan."
With "Additional Member," Netflix Standard and Premium subscribers can add up to two people who don't live with them to one account.
These "additional" members will have full access to the main Netflix account and will have their own profiles and login.
Additional memberships will not be counted in Netflix's overall paid subscriber numbers.
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So if you have someone on your Netflix account who doesn't live in your household (a kid in college, a friend, a distant cousin, whatever), you'll pay more for their access.
The "Profile Transfer" option allows subscribers at any price level to transfer their profile information, ie their viewing history, to a new paying account.
Both features are currently being tested in Chile, Costa Rica and Peru.
Netflix typically tests new features in smaller markets before rolling them out on a larger scale, and at this point it's unclear if "Additional Member" or "Profile Transfer" will become a larger offering or be scrapped.
However, with the company's shares plummeting and investors questioning its future growth potential, it's a good bet that these or similar options may be implemented sooner rather than later.
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That's how Netflix goes, that's how streaming goes
"We've always tried to make sharing within a member's household easier, with features like profiles and multi-streaming. While these have been very popular, they have created confusion about when and how Netflix can be shared with other households," the company said. on Tuesday.
"While we won't be able to monetize everything right now, we think it's a great opportunity in the short to medium term."
On the other hand, making customers pay for the privilege of sharing their accounts could backfire.
Netflix already raised its prices earlier this year;
additional costs could alienate your base.
The company is still in the early stages of figuring out how to monetize password sharing, and if Netflix clamps down on the practice, other services are likely to follow suit.
As a benchmark in the world of streaming, Netflix's decision could have ramifications throughout the industry.
