We knew Netflix was going to expand its crackdown on password sharing for a while. And with the streaming company set to roll out its new feature across the globe over the next few months, it’s ready for the backlash.
In the 2022 earnings report (as reported by The Verge), Netflix co-CEOs Ted Sarandos and Greg Peters, along with executive chairman Reed Hastings, detailed how the company plans to expand the functionality of converting users who share a password in different households to paid accounts. In 2022, tests for the new rules took place in Latin America.
Peters says, “Based on our experience in Latin America, we expect a backlash in every market when we roll out paid sharing, which impacts member growth in the short term.”
He then goes on to explain that Netflix should (in theory) recoup some of that lost money: “…as borrowing households begin to activate their own standalone accounts and additional member accounts are added, we expect to see an improvement in overall revenue”.
Apparently, users will be prompted to sign up for a new account or pay extra if Netflix identifies that the user is not based in the primary household. This is because password sharing between different households is against Netflix’s terms of service.
However, questions remain about how Netflix will monitor this activity. For example, will the company charge users who are on vacation or watching from a public space, such as when traveling by train? After all, streaming can be done from anywhere on almost any device.
We won’t know those answers for sure until the feature rolls out. Netflix did not specify which countries would receive the password-sharing crackdown first, just that it will be rolled out more widely in the first few months of 2023. However, it should be noted that there have been comments negative from Latin American users in testing.
While the company is prepared for a loss of subscribers, it comes at an unfortunate time. The cost of living crisis may cause users to cut their monthly expenses, and Netflix recently caused bad press with a host of canceled series, including 1899 and Warrior Nun.
