Netflix Running Test to Curb Unauthorized Password Sharing

Netflix is reportedly considering a move to enforce one of its terms of service: that a customer’s account credentials cannot be shared with individuals beyond the account holder’s household. The company recently introduced a limited test that displays a warning that reads, “if you don’t live with the owner of this account, you need your own account to keep watching.” It next prompts viewers with three options: to get an email or text verification code to authenticate the account, click on a button to verify later, or sign up for a new account.

Variety reports that, “the test is being run in multiple countries and only on TV devices … [although] it’s not clear if the prompts are random or if they’re triggered by specific activity on a given account.”

According to a LendingTree survey of 1,500 consumers, “nearly 40 percent of Americans say they use a streaming login and password that doesn’t belong to them — and about a third do so without permission from the account holder.” The survey also found that, “51 percent of those who have a streaming service account admitted they let others use it.”

Netflix is “the most popular shared service … 72 percent of respondents with the service say they let someone use their account.”

In past years, co-chief executive Reed Hastings stated that the company had no intent to curb password sharing because “there’s so much legitimate password sharing like … with your spouse, with your kids.” “So there’s no bright line and we’re doing fine as is,” he added. But as the company, with 203.7 million worldwide subscribers at the end of 2020, reaches saturation, “one clear way to boost revenue is to try to convert freeloaders into paying customers.”

Netflix’s Standard plan “allows just two concurrent HD streams per account, which makes it impractical for sharing among multiple people.” The Premium plan allows up to four streams per account, however. In October 2019, chief product officer Greg Peters said the company “was looking at the situation” of password-sharing and examining “consumer-friendly ways to push on the edges of that.”

The Independent reports that some Netflix subscribers are not happy about the company’s move to crack down on password sharing. It reports such social media posts as, “I have literally been a Netflix subscriber for more than 15 years. I’ll give my password to whoever I damn well please.”

Netflix revealed in January that it would “raise the cost of some of its UK subscriptions from next month to reflect the money being spent on content.” That prompted one user to tweet that, “You raised your prices and we paid. The crackdown on password sharing is despicable. SOME can’t afford your services … Lower your prices so we all can afford it & not share passwords.”

The Verge notes that, “one of the biggest questions Netflix subscribers might have is what constitutes a household account” and whether it includes such scenarios as children away at college or living in a different state. Parks Associates estimated that, “password sharing and piracy cost companies in the streaming space around $9 billion alone.”

Netflix Password Crackdown May Boost Risk of User Turnover, Bloomberg, 3/15/21

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