Netflix streaming giant now facing a huge loss of 2 lakh subscribers in the first three month of the year. It has signaled that it would tighten down on families that share passwords as it attempts to sign up new users following a dramatic drop in membership.

As a result of tough competition from rivals, the number of homes utilizing the streaming service declined by 200,000 in the first three months of the year.

It was also slammed after raising rates in certain countries and leaving Russia.

Netflix’s Two Million Users to Quit Subscription in 3 Months

Netflix told shareholders that another two million members will most likely quit in the three months leading up to July.

"Our sales growth has slowed significantly," the company informed shareholders on Tuesday, following the release of its first-quarter results.

"Our relatively high home penetration, when paired with the vast number of families sharing accounts, creates revenue growth challenges," says the company.

Reason Why Netflix Losing their Users

According to the streaming service, more than 100 million homes are breaching company rules by exchanging passwords.

Reed Hastings, the company's CEO, has described the practice as "something you have to learn to live with," adding that much of it is "legitimate" amongst family members. The company also stated that account sharing had most likely fueled its development by increasing the number of individuals who used Netflix.

However, Mr Hastings stated on Tuesday that it was making it difficult to attract new subscribers in some nations.

Neflix’s Strategy to Regain Customers

"When we were rapidly expanding, it wasn't a top priority to focus on [account sharing]. And now we're putting in a lot of effort on it "He informed shareholders.

Payment methods that the company is piloting to reduce password sharing in Latin America might be expanded to other nations, according to the company.

Account holders in Chile, Costa Rica, and Peru have had to pay since last month to add user accounts for persons outside their home (the company currently allows people who live together to share their Netflix account).

Users can add up to two more profiles for $2-$3 (£1.53-£2.30) each month on top of their monthly cost.

How Netflix Would Enforce the Rule Against Password Sharing?

Netflix, which did not specify how it would enforce the regulation, stated that it was looking for a "customer-centric" approach.

"The primary way we have is asking our members to pay a bit more to share the service outside of their homes," said Netflix's chief product officer, Greg Peters.

An analyst at research company Kantar, Dominic Sunnebo, cautioned that the strategy may backfire at a time when customers were seeking for ways to save money.

"If anti-password-sharing programs move too quickly and forcefully, they risk losing a possible future audience - many who password-share outside the family are unaware they're violating the conditions of their membership."

According to the sources, it is still an open question for Netflix that how it will implement the strategy to regain customers at a enough peak.