July 6, 2022

How Netflix’s password-sharing oppression might work

Netflix gesture next to Nasdaq MarketSite in New York, USA, Friday, January 21, 2022.

Michael Nagal | Bloomberg | Getty Images

Netflix This week has taken the world by surprise, with plans to finally solve the widespread practice of password sharing.

More than 100 million households use a shared password, Netflix said TuesdayIncluding 30 million in the United States and Canada.

But the video streamer did not plan to disable those shared accounts. Instead, the company would prefer to set up additional fees for accounts used by multiple individuals outside the home.

Netflix’s plan to catch lost revenue will start by sending alerts to account holders who use passwords by other families.

The company has Testing of this feature has already begun In Peru, Costa Rica and Chile. For accounts that share a password across addresses, Netflix charges an additional fee for adding “sub-accounts” to two people outside the home. Prices vary from country to country – $ 2.13 per month in Peru, $ 2.99 in Costa Rica, and $ 2.92 in Chile, based on current exchange rates.

The company also allows users with a shared password to transfer their personalized profile information to a new account or affiliate account, which allows them to retain their viewing history and recommendations.

“If you have a sister, suppose she lives in another city and you want to share Netflix with her, that’s great,” CEO Greg Peters said during the company’s revenue conference call. “We’re not trying to stop that sharing, but we’re going to ask you to pay a little more to share with her so she gets the benefit and value of the service, but also the revenue associated with that view we get.”

Netflix did not say how much revenue it could make by implementing its sharing strategy globally, however Peters said it thought it would take a year to use its subsidiary pricing globally.

A poll from a research firm called Time2Play 80% of Americans recommended it People who use someone else’s password will not be able to get their own new account if they can not share the password. It does not examine how many current account holders are willing to pay more to share with others.

Peters suggested that the company could still adjust the price or further review its testing strategy.

“It takes a while to implement this and get that balance right,” he said. “My hope is that we’re going to do it again in a year or so and then sort everything out, to set your expectations and release that solution globally, including markets like the United States.”

Unanswered Questions

Netflix’s project is unprecedented. No major streamer has ever reduced password sharing. Other owners of streaming services Disney, Warner Bros. Discovery, ComcastOf NBCUniversal and Paramount GlobalThey will not set up their own programs until they review Netflix’s password-sharing reforms.

Some account holders will no doubt be surprised when they receive news from Netflix that their passwords are being shared. It is also unclear how long Netflix will allow shared account viewers to maintain access if the primary account holder chooses not to pay extra.

In addition, Netflix should tread lightly on defining password-sharing to avoid mis-tagging misleading individuals, such as family members temporarily living away from home.

Not wanting to act against this group of users will save millions of people from the oppression of Netflix – at least to get started.

“They will start with a series of abusers,” said Rich Greenfield, media analyst at Lightshet Partners. “If your account is used by 15 people, it’s very easy.”

The company does not want to be embroiled in controversy over whether to classify its employees as household accounts and what qualifies as a subsidiary account. Competing against those definitions would be ugly for both employees and customers, who still see that as Netflix. Best-in-class brand.

But “Netflix knows who you are,” Greenfield said, whether or not you use your own personal profile.

Five years ago, Netflix actually promoted password sharing. The company’s philosophy at the time was that it needed more eyelids in its content, which would create buzz and lead to real subscriptions. That tactic seemed to work. Netflix subscriptions have been growing every quarter for over 10 years – Until the last quarter.

In 2017, Netflix’s corporate account tweeted “Love is sharing a password”.

Now, if you stop doing that the company wants it.

Disclosure: Comcast NBC Universal is the parent company of CNBC.

See: Netflix for testing additional fees for password sharing