Netflix Will Test Converting Password Sharers into Paid Subs
March 18, 2022
Netflix will test charging its subscribers an additional fee for account access for users outside the household in an effort to control unauthorized password sharing. The company has for many years ignored the practice of multiple users logging in to the same account from different locations, even though their terms of service say accounts “may not be shared with individuals beyond your household.” One analyst estimates Netflix leaves $6 billion a year on the table due to illicit password sharing. The result is “impacting our ability to invest in great new TV and films for our members,” the company explains.
Over the next few weeks, subscribers of Netflix standard and premium plans in Chile, Costa Rica and Peru “will be able to add sub accounts for up to two people they don’t live with — each with their own profile, personalized recommendations, login and password” — for a lower additional monthly fee of close to three U.S. dollars, product innovation director Chengyi Long said in an announcement.
Alternatively, members of Netflix’s basic, standard or premium plans can “enable people who share their account to transfer profile information either to a new account or an extra member sub account, keeping the viewing history, My List, and personalized recommendations,” Long writes in the post.
Netflix has not yet decided whether to expand the test beyond those three countries. “We’ll be working to understand the utility of these two features for members in these three countries before making changes anywhere else in the world,” Long adds.
Over the coming weeks, Netflix will be notifying those who share accounts outside their households to advise them of the new options. Bloomberg reminds us “this is not Netflix’s first time trying ways to get people to pay for their own accounts. In March 2021, it began testing two-step verification, in which after logging in, users would have to input a code that would be sent to the phone or email of the account owner.”
Next TV cites Citi analyst Jason Bazinet in a 2021 report that says, “password sharing costs U.S. streaming companies $25 billion annually in lost revenue, and Netflix owns about 25 percent of that loss.” The article references Bank of America’s suggestion that streaming services are losing revenue due to subscribers “sharing their authentication credentials with friends, family and hangers-on outside their homes.”
In January, Netflix raised its North America pricing for the first time since 2020, resulting in U.S. monthly fees of $13.99 to $15.49 for various plans.
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