And so, here it is: the Netflix (NASDAQ:NFLX) password crackdown has finally arrived in the United States, where it may or may not destroy the entire platform. If the stock price is any indication, it won’t do much good, but it won’t do a lot of bad, either, as shares are down slightly in Tuesday afternoon trading.
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The move began simply enough, with mailings going out to current Netflix subscribers encouraging them to keep their Netflix use inside their own household. Meanwhile, those who are outside the household should, instead, buy memberships. Such a process would be made simpler by offering lower rates for hopefully-former password sharers. Netflix’s own marketing notes that everyone living in that household can use Netflix wherever they are, thanks to the wide array of devices that Netflix is available on.
While telling which users are getting free Netflix and which are just a slightly-diffuse part of the household is unclear, Netflix tried. It required users in other areas to establish a “primary location”, which might work in some cases by tracing where traffic comes from. Recent earnings reports showed that Netflix’s earnings performance was starting to stagnate and growth rates were in open decline. The best source of quick growth? All those grown children, former roommates and ex-lovers that piggybacked quietly on others’ Netflix accounts.
This comes at a good time for Netflix, as it’s starting to face some revolt from analysts. Currently, analyst consensus calls Netflix a Moderate Buy thanks to 18 Buy ratings, 13 Hold and two Sell. However, with an average price target of $368.60, it has only a slight upside potential.
