We’ve known that Netflix was going to expand its crackdown on password sharing for a while. And as the streaming company is set to roll out its new feature across the world over the next few months – it is ready for the backlash.
In the earnings report for 2022 (as reported on by The Verge), Netflix’s co-CEOs Ted Sarandos and Greg Peters, along with executive chairman Reed Hastings, detailed how the company plans to expand the feature of converting users who share a password in different households to paid accounts. In 2022, testing for the new rules took place in Latin America.
Peters states: “From our experience in Latin America, we expect some cancel reaction in each market when we roll out paid sharing, which impacts near term member growth”.
He then continues to explain that Netflix should (in theory) claw back some of this lost money: “…as borrower households begin to activate their own standalone accounts and extra member accounts are added, we expect to see improved overall revenue”.
Allegedly, users will be given a prompt to sign up for a new account, or pay extra, if Netflix identifies that the user is not based in the primary household. This is because password sharing between different households is against Netflix’s terms of service.
However, there are still questions about how Netflix will monitor this activity. For example, will the company charge users who are on holiday, or watching from a public space such as when they are commuting on a train? After all, streaming can be done from just about anywhere on almost any device.
We won’t know these answers for sure until the feature rolls out. Netflix has not clarified which countries will receive the password sharing crackdown first, just that it will roll out more broadly in the first few months of 2023. However, it is worth noting that there was some negative feedback from users in Latin America during testing.
Whilst the company is prepared for a loss of subscribers, it comes at an unfortunate time. The cost-of-living crisis may be causing users to cut down on monthly spending, and Netflix has caused some bad press recently with a host of a cancelled series, including 1899 and Warrior Nun.