Netflix plans to crack down on US subscribers who share their streaming service password by the end of March. But how exactly would that work?
Initial reports and trials in other countries suggest that efforts to prevent password sharing will be relatively gentle in their first iteration, relying on a combination of technology and user diligence to prevent serial over- Getting sharers to pay more for the privilege.
Netflix will likely use a person’s geographic location, determined by the IP address of an internet-connected device, to figure out which people qualify as “household members” living together, Insider reporter Sarah Saril told CBS News.
“When you’re watching on a TV, it shows you exactly where you are,” Saril said. “You just want people in your household watching at your address.”
Netflix says on its website that the company uses “IP addresses, device IDs, and account activity from devices logged into the Netflix account” to determine which devices are in the same household.
“People who do not live in your household must use their own accounts to watch Netflix,” the website reads.
Netflix told investors last week that it would implement stricter sharing rules by the end of March. More than 100 million households currently share Netflix passwords, according to the service. That “undermines our long-term ability to invest in and improve Netflix,” the company said in a statement accompanying its recent quarterly results.
In 2022, Netflix restricted password sharing in Latin America and required members to pay an additional fee to share their accounts with non-household members. The effort had mixed results.
Tech publication Rest of World called the test “a mess” and reported that the new policy was rolled out inconsistently. Many users were able to avoid the additional fees, while others were asked to pay more and subsequently canceled their accounts, the outlet said.
Netflix predicted a similar reaction in the US. “From our experience in Latin America, we expect some exit reaction in any market when we roll out paid sharing,” the company told investors, noting that it could hurt its viewership in the short term.
Netflix has said it recognizes the new policy is a big change for customers and is trying to cushion the blow by announcing new features aimed at making the transition less painful. This includes allowing members to see all devices using an account and making it easy for users to transfer individual profiles into separate accounts. Last fall, the service also introduced a dashboard that allows account users to deregister individual devices.
Netflix didn’t specify how much these sub-memberships might cost. However, in trials in Chile, Costa Rica, and Peru, sub-memberships increased an account’s monthly cost by a quarter or a third, according to Variety.
“That’s where those tough conversations come in — who’s worth paying an extra quarter of your subscription cost every month?” Saril quipped.
When Netflix finds too many locations using the same account, it deploys a technological annoyance: a prompt asking users to “verify” some devices via authentication codes.
“If a device signs into an account outside of your household or is in constant use, we may ask that you verify that device before it can be used to watch Netflix,” the company’s FAQ reads.
However, Netflix also says it won’t automatically charge users if the system detects too many site streams, nor will it cancel accounts. This has led some observers to wonder just how effective password crackdowns will really be.
“All indications are that in the first iteration of the paid-sharing rollout, Netflix most aggressively intends to tease violators with email reminders and notifications,” Todd Spangler wrote in Variety in November.