Netflix password sharing is over in the US. The company has been testing its plans to crack down on password sharing since March 2022, but the new edict was not well received in test markets. Netflix made some tweaks to password-sharing alternatives and has since rolled them out in other countries. Those alternatives are now available in the US and “many other countries,” according to Gregory Peters, co-CEO and director, on an April 18, 2023 earnings call.

Previously, implementation in other countries was met with opposition, so Netflix dialed it back for a bit. Earlier this year, the company confirmed they planned to roll out password sharing in the US restrictions by the end of the year. And now it’s happening.

On Tuesday, Netflix posted an “Update on Sharing” to their blog, advising subscribers who share their Netflix passwords beyond their households that they won’t be able to do so anymore. In their announcement, the streaming giant focused on the positive:

“A Netflix account is for use by one household. Everyone living in that household can use Netflix wherever they are — at home, on the go, on holiday — and take advantage of new features like Transfer Profile and Manage Access and Devices,” Netflix wrote.

The company also acknowledged that they know their subscribers have other entertainment choices, but they believe their investment in content is what sets them apart – and that content is expensive. Netflix can no longer afford to “give it away,” or to let their subscribers share passwords to offer free access to nonpaying viewers.

Netflix advised their subscribers via email to review what devices are signed into their accounts and sign out of devices that shouldn’t have access. Another option is to change their Netflix passwords to stop access of unauthorized users.

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Why the crackdown on password sharing?

Netflix said that more than 100 million households share accounts, representing about 43% of their total subscriber base which was 232.5 million paid subscribers at the end of the first quarter. Each one of those 100 million households enjoys Netflix content for free. Even if a small fraction of nonpaying viewers convert to subscribers, Netflix could see subscriber and revenue growth.

Options for subscribers who share passwords outside their households

For subscribers who want to continue to share their Netflix passwords, there are two options:

• Viewers who have been sharing Netflix accounts but shouldn’t have been can subscribe to their own accounts and transfer those viewer profiles from the shared accounts to the new accounts.
• Current Netflix viewers who subscribe to the Standard or Premium plans can share their Netflix account with someone not in their household for $7.99 a month.

There are caveats, though. The Netflix Help Center shared these conditions:

• Extra members get their own account and password, but the original Netflix subscriber is billed for the extra member.
• The addition of an extra member to a Netflix account is only allowed in one country. For example, if the original subscriber is in the US, they cannot add an extra member in Canada or another country where Netflix is available.
• Extra members cannot be added to ad-supported plans.
• Extra members cannot be added to Netflix if they are billed through a third party.

Netflix plans and pricing in the US

Netflix currently offers four different plan options, starting at $6.99 a month.

*The ad-supported plan may not be available for Netflix accounts billed through a third party.

Insider Take

Netflix will lose some subscribers over this, but they are already losing money by allowing their subscribers to share their accounts with those outside their households. Something had to give. Netflix can’t afford to give away their content, especially not when they spend an estimated $17 billion on content per year. There will be consequences to the password sharing restrictions, some positive, some negative:

• Some subscribers will cancel their Netflix subscriptions. Netflix is a pricy streaming subscription, but they are also the gold standard in terms of user experience and content. Subscribers who churn because they don’t like this policy would probably have churned at some point anyway.
• Price sensitive consumers are not likely to add extra members.
• Some subscribers will add members outside their households at $7.99 a month. Though Netflix wouldn’t get paid their full monthly subscription fee, getting some money for nonpaying viewers is better than getting nothing.
• Nonpaying viewers who shared accounts with paying subscribers have been exposed to Netflix content already. This is a potential market for Netflix. In their April 18 earnings call, Netflix said these viewers have a “strong likelihood to convert.”

This might be a bumpy road for Netflix for the remainder of the year, but Netflix is anticipating the ramifications of their decision.

Copyright © 2023 Authority Media Network, LLC. All rights reserved. Reproduction without permission is prohibited.