Netflix details how password sharing crackdown will evolve

Netflix has been hinting it would monetize account sharing for quite some time now, and it seems that the company is finally entering uncharted territory. Steps are detailed in its most recent earning report.

In the document, Netflix says it is planning to remove account sharing from its service and re-add the feature as a paid option for subscribers in the coming months, likely before March.

It means the streaming giant will restrict the simultaneous use of Netflix accounts beyond households. If you’re sharing the subscription with your husband or wife who is living with you, you’re safe.

But your dad, mom, or a friend who lives far away should not be able to use your account anymore. At least for free – it seems that Netflix is focused on pushing its paid sharing option onto consumers.

“As we roll out paid sharing, members in many countries will also have the option to pay extra if they want to share Netflix with people they don’t live with,” Netflix said in the report.

The firm previously said that account or password sharing has led to more than 100 million households watching content for free. Netflix finished 2022 with 231 paid memberships, and it clearly sees space to generate additional revenue.

And it is choosing paid sharing. As Cybernews reported earlier, the idea is for people to pay $3 a month more if they want to keep sharing their accounts. Netflix has been trying out the system in several Latin American countries.

“Today’s widespread account sharing undermines our long term ability to invest in and improve Netflix, as well as build our business,” Netflix said.

The company admitted that the new rules resulted in some “cancel reactions” in Latin America: “Some borrowers stop watching either because they don’t convert to extra members or full paying accounts.”

However, even if engagement could be negatively impacted, Netflix said the overall pattern observed in Latin America was positive as more and more of the so-called freeloaders chose to set up their own standalone accounts.

There’s, of course, the option of a cheaper ad-based tier, designed to soften the blow of losing access to content on someone else’s account. However, in November, only about 9% of Netflix’s US subscriber sign-ups were for the $6.99/month ad-supported package, making it the least popular among its plan options, according to an analysis released by research firm Antenna.

Netflix says it’s ok – supposedly, the numbers are better than expected. And yet, Netflix’s co-Chief Executive Ted Sarandos, when asked on the company’s Q4 earnings call whether it might pursue a so-called FAST (free ad-supported TV) service, didn’t say no, the Hollywood Reporter said last week.

In other words, one day, there may be a Netflix-owned streaming offering that would be free with ads. Most probably, the full catalog would not be available to unpaid subscribers, though.