paid password sharing

Netflix plans to enforce rules preventing password sharing “more broadly” in the first quarter of 2023, which could mean the rules will come into force in March or April.

The streaming giant released its Q4 2022 earnings on January 19th and detailed the password-sharing plans in its earnings report (spotted by The Verge). The report says:

“Later in Q1, 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. While our terms of use limit use of Netflix to a household, we recognize this is a change for
members who share their account more broadly.”

The report goes on to highlight features Netflix is developing, such as the ability to transfer a Netflix profile to a new account or the incoming paid sharing capability that will let users pay extra to share Netflix with people they don’t live with. Moreover, Netflix warns that it expects the transition will negatively impact engagement in the “near term” but that in the long term, the change will lead to “improved overall revenue.”

Netflix has already been testing paid password-sharing features in several countries, including Argentina, El Salvador, Guatemala, Honduras, and the Dominican Republic. Those tests have given us a glimpse of how paid password sharing might work when it rolls out more broadly.

Along with paid password sharing, Netflix added a cheaper ad-supported tier in a bid to keep subscribers.

Source: Netflix Via: The Verge

In a recent blog post, Netflix detailed a new take on paid password sharing. The change to Netflix’s service will force subscribers to pay extra to share their accounts with different homes.

However, Canadians don’t need to panic just yet — Netflix appears to be testing different approaches to paying for password sharing. In March 2022, Netflix rolled out an ‘add extra member’ option in Chile, Costa Rica, and Peru. Now, the company plans to launch the ‘add a home’ capability in Argentina, the Dominican Republic, El Salvador, Guatemala, and Honduras.

In a blog post, Netflix describes how the ‘add a home’ capability works. To start, the streaming giant says each Netflix account will include one home where subscribers can use it. To use the account in other homes, there will be a fee of:

219 pesos (about $2.20 CAD) per month, per home, in Argentina
$2.99/mo per home in the Dominican Republic
$2.99/mo per home in Honduras
$2.99/mo per home in El Salvador
$2.99/mo per home in Guatemala

Netflix doesn’t clarify in its blog, but the $2.99 cost is presumably in USD, which translates to roughly $3.86/mo CAD per additional household.

Interestingly, Netflix says that the plan includes travel and that subscribers can still watch while outside the home on their tablet, laptop, or mobile device. Finally, there will be an option to manage homes on the account settings page.

Netflix is still running with the line that it needs to charge for password sharing so it can continue to “invest in and improve our service.” However, if the new ‘add a home’ capability plays out similarly to the company’s other paid password sharing test, it’ll leave some questions about how competent the company is at administering these changes.

Netflix seems to struggle with enforcing password-sharing changes

In June, reports indicated Netflix’s ‘add extra member’ option being testing in Chile, Costa Rica, and Peru left customers confused. Netflix reportedly didn’t inform subscribers about the change to password sharing, and others were able to bypass prompts for validation and continue using a shared password without issue.

Netflix appears to be having some difficulty enforcing the paid password sharing capability. And with that in mind, I wonder how Netflix could enforce these changes without significantly altering how the service works. To my knowledge, Spotify is one of the few streaming services that has somewhat successfully combated password sharing by effectively limiting each Spotify account to one active streaming session at a time — for better and worse.

For example, I use a Spotify family account that I share with my wife and a few other family members. We can all listen to music simultaneously thanks to each person having their own Spotify accounts connected to the subscription. However, my account is also tied to my smart speakers, which means that if someone plays Spotify using a speaker, it will interrupt whatever session I have going on my phone.

If Netflix is serious about stopping password sharing, this may be the route to take. To use Netflix, you need an account, and it needs to be tied to an active subscription. Then there can be a set limit to how many accounts can use a given subscription, plus maybe an extra fee to increase that cap. But, Netflix doesn’t appear to have attempted something like this yet, and it’s not clear if it will.

Alongside promises to crack down on password sharing, Netflix has also revealed plans to introduce a new, lower-cost subscription tier supported with ads. The company appears to want both of these operating by the end of 2022.

Source: Netflix