Netflix is bringing an end to password sharing but this could be a challenge for both viewers and the streaming company. Netflix has said that it will put an end to password sharing starting in 2023, asking people who share accounts to pay to do so. The company expects to begin rolling out the change in the U.S. early in the year.
According to reports, the streaming service has recognized password sharing as a significant issue that would affect subscriptions in 2019, but it was unsure how to solve the issue without offending customers. Then Covid lockdowns occurred, resulting in a rush of new subscribers, and the initiative to carefully monitor sharing collapsed. Netflix didn’t pursue a plan to crack down widely on the practice until this year, as subscriber losses mounted.
Reports state that Reed Hastings, Co-Chief Executive at a company gathering outside Los Angeles early this year, told senior executives that the pandemic boom had masked the extent of the password-sharing issue, and that they had waited too long to deal with it. Netflix reported earlier this year that more than 100 million Netflix viewers now watch the service using passwords they got from family members or friends.
Netflix seems to be at risk of throwing out of the window years of flexibility the platform offers to its customers as the crackdown might drive more customers to other streaming platforms.
“Make no mistake, I don’t think consumers are going to love it right out of the gate,” Ted Sarandos, Netflix Co-CEO told investors early in December, adding it was up to the company to make sure users see value in paying for the service.
Netflix has also switched gears on showing ads in content after years of resisting it. A $6.99-a-month ad-supported tier launched in November, aiming to capture new users looking for a discount to more expensive ad-free plans.
Netflix’s terms of service however have long gone from the account owner not allowed to share passwords, which was never sticky enforced to the company updating its customer help pages this year to say accounts are only to be shared by people who live together. The company has said it would enforce its rules based on IP addresses, device IDs and account activity.
According to reports, in order to mitigate consumer backlash, Netflix has discussed dialing up the pressure on password sharing gradually. Some product executives warned against making the service too complex and not consumer friendly.
Netflix considered allowing users to rent pay-per-view content through their subscriptions, as Amazon Prime Video customers can, because it could make users wary of sharing their login information with others who might run up their bills. It’s also revealed that the company decided against that tactic, in part because product executives were concerned it would take away from the simplicity of the service.
