Will Netflix End Password Sharing? What is known so far?

Netflix subscribers have been following the platform’s decisions to block password sharing for years. The practice is common among users but has been seen as a loss for the managers of the streaming service. In a text published in its press room last Wednesday (8), the platform informed users and the press of the new guidelines regarding the sharing of passwords and access outside the subscriber’s home, after months of speculation in the media.

The company also included four more countries (Canada, Portugal, Spain, and New Zealand) in its measure to charge for off-site accesses. Such a feature had been tested before in some Latin American countries, such as Argentina, Chile, Honduras, and Peru. To understand the long process surrounding Netflix and the end of password sharing, check out the information below.

What’s new so far?

Last Wednesday (8), the platform published in its press area a text called “News about sharing”, credited by the director of innovation Chengyi Long. The content lists the measures taken so far by the company to reduce password sharing.

The director further explains that these measures were taken due to the high number of users accessing content without being customers – which according to the company has hampered the production of new movies and series. Among the measures, which the company says help the user to have control of who accesses the account, are:

• setting the primary location for subscription access;
• managing the account used among household members and the devices connected to the service;
• profile transfer;
• ability to use Netflix on other Wi-Fi connections when traveling;
• purchase of up to two extra members outside the main location.

At no point in the text is there any direct mention of prohibiting or blocking access outside the subscriber’s home or how these measures are implemented.

Understanding how Netflix can prevent password sharing

Among the mechanisms studied for the longest time by the company is the monetization of accesses outside the subscriber’s home. As a possible alternative to the problem, in August 2022, tests were conducted in Latin America of the Netflix Homes extension, where subscribers are notified of an extra fee for access outside their registered Wi-Fi IP address. This justifies the new feature to manage accesses and devices logged into your account, made available last week.

Countries such as Honduras, Costa Rica, Chile, and Peru were some of the locations that were part of the test. At the time, the values applied were 2,380 Chilean pesos; US$2.99 in Costa Rica; and 7.90 Peruvian sóis. More recently, Canada, Spain, Portugal, and New Zealand have joined the list of countries for the extra fee. According to the American newspaper CNN, subscribers to the Standard and Premium plans can insert up to two subscribers outside their residence to access the account.

The rates are 7.99 Canadian dollars, 7.99 New Zealand dollars, as well as €3.99 in Portugal and about €3.99 in Spain. Information passed on by shareholders of the company and published in a story in the Wall Street Journal (WSJ) in December 2022, informs that the charge may be applied even more widely in 2023.

To get an idea of the amounts obtained with the measure, still, according to the WSJ, investment bank Cowen Inc. estimated how much revenue Netflix would receive if the extra fees were applied in the United States and Canada. Considering the hypothetical amount of US$3 charged to each of the 30 million non-paying users located in the two countries, the profit to be made by the company in 2023 would be US$721 million.

What will the practical rules be to prevent password sharing?

It is possible to get an idea about what the practical rules would be from the update retrieved by The Streamable website (also available from the Wayback Machine) in January this year. According to Netflix, the rules in the site’s Help Center were published by an error and later deleted. In seven topics, questions are clarified about how the blocking is done in accesses outside the home and how to prevent them, whether it is possible to share the account with non-subscribers, and how to consume the service when traveling.

In the FAQ, it is informed that it is not allowed to log in to the account outside the registered residence, being possible only to share between people of the same address. Otherwise, according to the text, the platform will suggest that the external user make his subscription, and ask the subscriber to block entries outside the home – or this will be done by the platform itself. Netflix considers as “reliable” the accesses made in the main location (in this case, the subscriber’s home), where at least one content is consumed each month.

In case of extra charges, the update states that the amounts will not be charged immediately. Already in travel situations, the subscriber can request a temporary code from Netflix when accessing the service on a device outside the residence. The alternate login is valid for seven consecutive days.

What other steps have already been taken?

Since 2019, Netflix has planned actions to curb non-subscribers free access to the platform. The measures were to be implemented the following year, but the company postponed the decision due to the increase in subscriptions during the quarantine during the COVID-19 pandemic. However, there was also a growth in unpaid accesses, which according to a survey obtained by the WSJ reached 100 million users worldwide.

Another alarming index for the company was the drop in subscriptions. Only in the US and Canada, there was a drop of 1.3 million subscribers and one million in the rest of the world. These results influenced the decision to retain old subscribers and gain new ones. Two emblematic ideas, in this case, were profile transfer and the creation of a basic subscription plan.

The first feature had been a long-standing demand of Netflix users, according to the company, and was implemented in October 2022. With profile transfer, users can migrate their data to another account and thus keep their settings, such as personalized recommendations, access history, and content lists.

In the following month, the platform made official its basic plan with advertising. In the new mode, the user has similar benefits to the basic plan, with the difference that the image quality is in 720p (HD) and ads are displayed with a duration of 15 to 30 seconds before and during movies and series. On the other hand, not all of Netflix’s catalog is available for contractual reasons.

Even with the new facilities, Netflix has not set aside restrictions against password sharing. In March 2021, the company conducted tests to veto unpaid access to the service, according to information obtained by the American site GammaWire. In the experiment, users who made entries outside the subscriber’s home received an on-screen notification suggesting the service to new subscribers. In addition, the subscriber could confirm account ownership using a verification code via email or SMS.