Netflix plans to end password sharing; here's how and why

Streaming giant Netflix is all set to pause multiple users on a single account as it plans to stop the practice of password sharing.

It will in fact start nagging customers to pay extra if it detects that they’re sharing their account with individuals outside their household — in violation of the streamer’s terms of use.

In early 2023, Netflix plans to roll out “a thoughtful approach to monetize account sharing,” expanding beyond its initial test markets in Latin America, the company said in October. That will encourage password-sharers to create sub-accounts (“Extra Members”) and pay for people outside their households. 

Though Netflix hasn’t disclosed what an extra member sub-account would cost yet. In Chile, Costa Rica, and Peru, that fee reportedly has been 23-29 per cent of the Netflix Standard two-stream plan, which suggests that in the US the cost of sub-accounts could be $3.50-$4.50 each.

Variety reported that in the three test markets, Netflix has notified members who appear to be sharing their account outside their household (detected based on data such as IP addresses, device IDs, and account activity from devices signed into the Netflix account) about the new payment options.

Netflix also has prompted users to verify their credentials by sending a verification code to the primary account holder.

What happens if piggybackers don't get off?

For now, all signs indicate that the most aggressive Netflix intends to get in the first iteration of the paid-sharing rollout is to keep prodding violators with email reminders and notifications.

Why is Netflix restricting password sharing?

The Covid-led lockdowns encouraged people to stay home and closed down theatres creating a surge in the number of users for the streaming giant. However, as the world reopened this year, Netflix quickly saw a drop in the number of subscribers.

In Q1 2022, Netflix reported that it lost about 200,000 subscribers due to fierce competition and the war in Ukraine.

The company had suspended services in Russia resulting in the loss of 700,000 subscribers. The second quarter was even worse, with the company losing nearly 1 million subscribers, the biggest loss in company history. Following the report, Netflix’s stock tumbled 26 per cent, erasing about $40 billion of stock market value.