Netflix has hinted it will crack down on households sharing passwords as it seeks to sign up new members following a sharp fall in subscribers.
About 200,000 people left the streaming service in the first three months of the year as it faced intense competition from rivals.
It was also hit after it raised prices in some countries and left Russia.
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Netflix warned shareholders another two million subscribers were likely to leave in the three months to July.
“Our revenue growth has slowed considerably,” the firm told shareholders on Tuesday after publishing its first quarter results.
“Our relatively high household penetration – when including the large number of households sharing accounts – combined with competition, is creating revenue growth headwinds.”
The streaming giant estimates more than 100 million households are breaking its rules by sharing passwords.
Boss Reed Hastings has previously described the practice as “something you have to learn to live with”, adding that much of its is “legitimate” between family members. The firm has also said it was likely to have helped fuel its growth by getting more people using Netflix.
But on Tuesday Mr Hastings said account sharing was making it hard to attract new subscribers in some countries.
The firm also said that measures to stop password sharing that it has been testing in Latin America could be extended to other countries, with accounts that break the rules charged extra.
“When we were growing fast, it wasn’t a high priority to work on [account sharing]. And now we’re working super hard on it,” Mr Hastings told shareholders.
Lucas Shaw, who writes the Screentime newsletter for Bloomberg news, told the BBC that password sharing had been an issue for the firm “for a long time” but was by no means its biggest challenge.
“It feels like the company is trying to identify an area of potential growth,” he told the Today programme.
“They’ve tried to curb password sharing in the past and had a very hard time.”
Shares in the streaming giant plunged more than 25% in after-hours trading following the news, wiping more than $30bn (£23bn) off the company’s market valuation. (BBC)
