Netflix’s Crackdown on Password Sharing in the US: New Policy and Implications

(CTN News) – The Netflix password-sharing crackdown has arrived in the States.

On Tuesday, the streaming service began notifying subscribers of its new policy prohibiting sharing Netflix accounts outside of the same household.

Transfer Profiles or Pay Extra: Netflix’s Options for Sharing Outside the Household

“Your Netflix account is for you and the people you live with – your household,” the firm wrote in an email published on the business’s blog on Tuesday.

The email explains that users can share profiles with others outside of their immediate families so that those people can start their memberships at their own expense. Alternatively, they can pay an additional $7.99 monthly for each user outside their household.

An additional member can be added to either the regular or premium plan at no additional cost, as stated on Netflix’s subscription plans website.

Soon after the company’s growth slowed, Netflix warned that it would be cracking down on password sharing to increase income and member numbers.

During an earnings call last month, Netflix informed investors and customers that the deployment of its crackdown on users who use other accounts to establish fake profiles will be delayed until the second quarter.

The firm says over 100 million homes (or around 43 percent of the total user population) use shared accounts. Netflix has stated that this has reduced its ability to invest in fresh content.

Netflix has already provided instructions on password sharing in New Zealand, Canada, Portugal, and Spain this year.

Netflix announced it would require customers in certain regions to designate a “primary location” for their accounts and charge extra for users to create two accounts outside their primary area.

On Tuesday, the business informed U.S. families that they could transfer an existing profile or pay a fee for an additional family member but gave no other details.

The corporation reported that the first-quarter rollout of similar programs abroad affected subscriber growth. Despite this, Netflix added 1.75 million subscribers throughout the period.

Netflix officials stated that the announcement resulted in cancellations throughout Latin America, impacting the company’s short-term development. However, they would use the borrowed passwords to sign up for new accounts and add the original members as “extra members.” They claim that because of this, the company’s revenue has increased.

Netflix officials have compared the shift to paid sharing to a price increase, saying that customers will initially baulk and delete accounts before eventually coming around and signing up for their own.

Strategies to Boost Revenue: Netflix Introduces Ad-Supported Tier and Combats Password Sharing

In addition to its crackdown on password sharing, Netflix has recently established a lower, ad-supported tier to raise revenue. Both changes were made after Netflix reported its first drop in membership in over a decade at the beginning of 2022.

The media industry has been trying to figure out how to generate money off streaming services by reducing the price of content and increasing revenue from advertising and other means.

The streaming service previously known as HBO Max and Discovery+ was rebranded as Max on Tuesday by Warner Bros. Discovery.

The unified Paramount+ and Showtime app was also announced this week by Paramount Global and is scheduled for release in late June. Hulu programming will soon be available on Disney+, the company recently revealed.