How Netflix will stop users from sharing passwords

ARE you sharing your Netflix passwords among friends or family members outside your homes?

Video streaming giant Netflix said sharing of single subscription accounts will no longer be allowed outside households unless you pay extra.

The crackdown starts before April.

Netflix subscribers

Netflix has 223 million subscribers around the world as of 2022, with US$32 billion revenue. In the Philippines, it is the top video streaming service, dominating 31 percent of the market.

However, around 40 percent of these subscribers share accounts. This affects their bottomline, which was estimated to be around US$6.25 billion.

So they came up with an idea of limiting access of every subscription to one household only. If subscribers want to share their accounts to those they don’t live with, they pay extra.

It is not yet known exactly when the paid sharing starts. Netflix said it will be “later in Quarter 1” which ends on March 31.

“We expect to start rolling out paid sharing more broadly. Today’s widespread account sharing (100M+ households) undermines our long-term ability to invest in and improve Netflix, as well as build our business,” Netflix said in a letter to shareholders last January 19, 2023.

How will Netflix stop users from sharing their passwords?

The IP address of any internet-connected device will serve as a person’s geographic location, which Netflix will likely utilize to determine whether individuals count as “household” members who reside together, according to US media reports.

To identify which devices are in the same household, Netflix uses IP addresses, device IDs, and account activity from devices logged into the Netflix account.

“People who do not live in your household will need to use their own account to watch Netflix,” the same report said.

How will it be implemented?

Currently, Netflix users are able to access their accounts in multiple gadgets like smartphones and television, even if they are outside their homes. 

With the new system, “as is the case today, all members will be able to watch while traveling, whether on a TV or mobile device,” Netflix said.

The Netflix account sharing stops when friends or relatives log into the paid subscriber’s account in their mobile, tablet or smart television.

“We’ve worked hard to build additional new features that improve the Netflix experience, including the ability for members to review which devices are using their account and to transfer a profile to a new account,” it added.

Not the first time

Netflix experimented with this paid sharing arrangement in Costa Rica, Chile and Peru last year. Subscribers paid additional US$2.99 (Php 162) to be able to add two members into their accounts. 

In October 2022, the firm stopped the paid sharing plan in Argentina, El Salvador, Guatemala, Honduras, and the Dominican Republic, after facing backlash on social media due to the rollout of the ban on password-sharing. 

Cancel reaction

According to Netflix, the service is projecting some “cancel reaction” the moment they implement the paid sharing plan, which, as a result, “impact near-term member growth.”

“As we work through this transition – and as some borrowers stop watching either because they don’t convert to extra members or full paying accounts – near term engagement, as measured by third parties like Nielsen’s The Gauge, could be negatively impacted,” it said. 

But they believe that the subscribers will come back and borrowers creating their own accounts, by bringing better programming.

Competition

The firm contends that because consumers have so many entertainment options, the market is nevertheless extremely competitive. 

Beyond direct streaming rivals, they compete for viewers’ attention with others like gaming, linear TV, YouTube, and short-form entertainment like TikTok.

“The silver lining is that the market for entertainment is huge and Netflix is still very small by comparison,” Netflix said.

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