Netflix starts to crack down on password sharing
By Nicole Sperling
The great Netflix password crackdown has begun.
The streaming giant sent out an email last week to U.S. members who are sharing their account with people living outside their household that made clear it would begin kicking people off the service if they were using someone’s account for more than 30 days while at a different location.
For households willing to pay for an additional person to have access to their account, Netflix said it would charge an extra $7.99 per person. Otherwise, it said, it would encourage those users to sign up for an account themselves. (Netflix allows users to transfer their existing profiles to a new account to save their algorithm.)
The news was not a surprise. More than a year ago, in April 2022, the company announced its first subscriber loss in 10 years, attributing the decline, in part, to shifting economic forces as well as increased competition from other streaming services. It said at the time that it would look for ways to increase revenue, including adding a cheaper ad tier and cracking down on password sharing among households. Netflix estimated that 100 million people worldwide were accessing their streaming service without paying for it.
Netflix offers a variety of pricing options now, from $6.99 a month on the low end for an ad-supported version, to $19.99 a month on the high end for a version that doesn’t include ads and allows subscribers to add two other members for an additional $7.99 a month, per person.
Some Netflix subscribers have taken to Twitter to voice their displeasure with the new strategy, noting that the company for years had encouraged users to share their password with others.
But that was a different time, one when Netflix reigned as the only streaming service in town. Now consumers have a plethora of choices, from Disney+ to Warner Bros. Discovery’s newly launched Max to Peacock and Paramount+ and many others. And Netflix’s efforts to generate more revenue per subscriber come as many consumers are feeling the economic strain from inflation.
With the new policy also occurring in the middle of the writers strike, some influential writers were encouraging users to cancel their Netflix account in solidarity with the writers.
Still, the displeasure isn’t unexpected by Netflix. The company has spent the past year testing the strategy in smaller markets like Canada, New Zealand, Spain and Portugal. It said in its most recent letter to shareholders that the initial reaction to limiting passwords is a “cancel reaction in each market” followed by “increased acquisition and revenue” after the borrowers activate their own accounts.
In Canada, where Netflix imposed the strategy in the first quarter of this year, the company wrote that “our paid membership base is now larger than prior to the launch of paid sharing and revenue growth has accelerated and is now growing faster than in the U.S.”