from next year, netflix It will start harassing customers to pay extra if it detects that they are sharing their account with people outside their household, in violation of the streamer’s terms of service.
But users determined to continue flouting Netflix’s password-sharing rules won’t face draconian repercussions just yet: The company won’t terminate someone’s account even if they share passwords, and Netflix is not likely to impose additional charges without the consent of the customer.
In early 2023, Netflix plans to roll out “a thoughtful approach to monetizing account sharing,” expanding beyond its first test markets in Latin America, the company said in October. This will encourage password sharers to create sub-accounts (“Additional Members”) and pay for people outside their household. Recent headlines about the initiative – “The end of Netflix password sharing is near” (Wall Street Journal) and “The end of free Netflix password sharing is coming” (CNET) – have given the impression that the company will start enforcing the no-account-sharing rule with punitive measures. In fact, Netflix’s password sharing and monetization plan is basically based on the honor system.
Netflix did not disclose what an Extra Member sub-account would cost in the United States or other new markets. In Chile, Costa Rica, and Peru, these fees represent 23% to 29% of the Netflix Standard two-stream plan, suggesting that in the United States, the cost of sub-accounts could be $3.50 to $4.50 each. In all three test markets, Netflix notified members who appear to be sharing their account outside of their household (detected based on data such as IP addresses, device IDs, and account activity of devices logged into the account Netflix) new payment options. Netflix also prompted users to verify their credentials by sending a verification code to the primary account holder.
What if the customer doesn’t pay for password piggybacks? All signs indicate that the most aggressive Netflix intends to enter the first iteration of the paid sharing rollout is to continue to incentivize violators with reminders and email notifications.
From the company password sharing help page Currently, it says, “Netflix won’t automatically charge you if you share your account with someone who doesn’t live with you.” This is unlikely to change in the near future. If Netflix were to automatically levy a new fee for account sharing, in addition to angering customers — who have engaged in password sharing for years with Netflix’s Wink and Wink Endorsement – it would draw the attention of regulators to potential anti-consumer billing practices.
The fact that Netflix’s monetization strategy for password sharing is on an opt-in basis highlights the uncertainty of how much extra money it will make from the so-called “crackdown.” The company is eager to develop new revenue streams as core subscriber growth has slowed (and even declined in the first half of 2022). In addition to the monetization of paid sharing, Netflix has rushed this year to launch a new, cheaper ad-supported plan in November; this seems to have a relatively slow start.
Netflix has determined that the passwords are being shared in violation of its rules with more than 100 million non-paying households worldwide – but obviously, he will not be able to convert all this activity into income. Wall Street firm Cowen estimated that Netflix’s paid sharing program could add nearly 15 million paid sharers and 1 million new members in the United States and Canada in 2023, representing some $721 million in incremental revenue in the UCAN region each year (5.1% vs. previous analyst). This is based on a Cowen consumer survey, conducted in August 2022, asking password sharers if they would pay $3 more per month; 50% of respondents said they or the primary account holder would. Needless to say, however, there is a difference between what people say they will do and what they really To do.
Meanwhile, Netflix has rolled out additional features designed to encourage password scavengers to do the right thing and pay for legitimate account access. This fall, he added the ability for subscribers to convert user profiles into new separate accounts and a dashboard to let users disconnect individual devices remotely.
“We would never deploy anything like ‘turning the screws’ on people who share passwords, Reed Hastings, co-CEO and co-founder of Netflix, said during the company’s first quarter 2021 earnings interview. “It has to feel like it makes sense to consumers, that they understand.” Of course, Hastings once insisted that Netflix would not launch an ad-supported planso — never say never.
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