Netflix To Begin Charging You For Sharing Passwords Very Soon
Netflix has already rolled out fees for sharing passwords in other countries and will soon be charging accounts in the U.S. as well.
Netflix is planning to crack down on password sharing in the coming weeks by launching its newly minted “paid sharing” program. Starting in the United States, the home of popular shows like Stranger Things and Squid Game, said the move is part of a global rollout. “We launched paid sharing in four countries and are pleased with the results,” the streamer said in a letter to shareholders.
The decision to crack down on the practice came as Netflix noticed an uptake in password sharing. As a result, the streamer, who faced rising competition from HBO Max and Amazon Prime Video, conducted a series of tests in 2021. Viewers were asked to verify their accounts using a code sent to the account holder.
The number of people who selected the “verify later” option was a cause for concern. In early 2022, Netflix officially announced plans to curb password sharing. Account holders in Chile, Costa Rica, and Peru were given a chance to create two reduced-priced “subaccounts.” That was followed by an “add home” feature in Latin America that allowed users to buy more locations with the same account.
In October 2022, during its third-quarter earnings report, Netflix confirmed that it would charge password sharers in the first half of 2023. According to Deadline, the company was tired of losing billions of dollars in revenue, especially as competition from Disney+ started to increase. CEOs Ted Sarandos and Greg Peters expect a certain level of backlash from some subscribers.
But they believe it is the best move for the platform in the long run. Netflix has already launched its paid password sharing in Canada, New Zealand, Spain, and Portugal. It works by asking subscribers to set a primary location for their accounts. Users are then prompted to pay a fee for additional accounts to transfer the profiles of others using their login credentials in a different location/household.
The additional Netflix password fees cost CAD 7.99, NZD 7.99, 5.99 Euros in Spain, and 3.99 Euros in Portugal. Prices have not been announced for all territories. But the company expects to see a noticeable difference in its second and third-quarter results. The streamer hopes that tests conducted in other countries will help refine the program as it launches around the world.
“We’re pleased with the most recent launches of paid sharing, and while we could have launched broadly in Q1, we found opportunities to improve the experience for members,” Netflix said about its password-sharing crackdown. “We learn more with each rollout, and we’ve incorporated the latest learnings, which we think will lead to even better results.”
While sharing a Netflix password might not seem like a big deal, the practice undermines the company’s ability to invest and improve. From a viewer’s perspective, it’s also a little like watching a bootleg copy of your favorite show. As such, the streamer is willing to lose a few subscribers as it believes more people will be willing to pay for their own accounts to access the service.
Executives also believe that the new ad-supported tier will give Netflix subscribers more price options which could offset some cancellations by password sharers. Wall Street analysts also expect paid-sharing and ad-tier to work in tandem, with the latter aiding the former.
