Netflix May Soon Charge for Sharing Passwords

Sharing your Netflix account with family and friends may soon cost extra. Netflix is currently testing a rate plan that charges users who access an account from a different address than the main account holder. After losing 200,000 subscribers in the first quarter of 2022, the company is looking for ways to bring in more money to please investors. Cracking down on shared accounts will be part of the plan. 

Netflix CEO Reed Hastings discussed his strategies to raise revenue, “We are working on how to monetize sharing. We’ve been thinking about that for a couple years. When we were growing fast, it wasn’t a high priority. There are over 100 million households who are already enjoy Netflix. They love the service and we just got to get paid at some degree for it.” 

He also talked about content, “We have great competition, and we have to take it up a notch. This is our moment to shine. This is when it all matters.”  

As more studios take back licensing rights, popular shows and movies leave Netflix. Netflix’s most-watched title, The Office left to stream exclusively on NBC’s Peacock service. Many films have left for Disney+ and Hulu, including The Help, The Muppets, Princess & the Frog and others. The Star Trek series and spinoffs have returned to Paramount+ with Star Trek: The Next Generation the latest to depart Netflix.  

While Netflix has led the way in quality programming, it will have to continue to offer new, popular titles with big names to attract or keep subscribers. The Netflix April shareholder letter addresses the content plan for the future. “On the content side, we’re doubling down on story development and creative excellence, which we see reflected in big Q1 ’22 T.V. hits like Bridgerton (627 million hours viewed for season 2, our biggest English language series in our history) and Inventing Anna (512million hours viewed).” It continues with the list, “ Films like Tinder Swindler (166million hours viewed, our biggest documentary film ever released) and The Adam Project (233million hours viewed), which come on the back of our Q4 hits Red Notice and Don’t Look Up.

Netflix is no longer the only game in town, as other services now offer a wealth of content. With prices rising for streaming services, more people are selective about how many and which subscription streaming platforms to keep. 

Netflix has revealed that over 100 million households share their password with someone outside their home. It could be anyone from a child going to college to parents to friends who share another service in exchange for access to Netflix. According to research firm Time2Play, overall, 50.7% of subscribers let someone outside their household use their account. It varies from state to state, with the highest number of accounts shared in Ohio at 59%. And it’s not simply sharing with one other person, as subscribers share with an average of 2.3 people. 

According to CNBC, Chief Operating Officer Greg Peters explained in the company’s earnings conference call, “If you’ve got a sister, let’s say, that’s living in a different city, you want to share Netflix with her, that’s great…We’re not trying to shut down that sharing, but we’re going to ask you to pay a bit more to be able to share with her and so that she gets the benefit and the value of the service, but we also get the revenue associated with that viewing.”

Many customers feel justified in sharing. Five years ago, Netflix even encouraged password sharing. The company wanted as many views as possible hoping that word of mouth would lead to more subscriptions. In today’s competitive market, Netflix is changing its perspective.

Of those 100 million shared accounts, 30 million are in the U.S. and Canada. It’s a worldwide phenomenon. Netflix is testing a plan outside the U.S. to charge for accounts that log in at a different address from the account holder. In Peru, Chile, and Costa Rica, Netflix is charging an additional fee to add “sub accounts” for up to two people outside the home. In Peru, it’s approximately $2.13 per month, $2.92 in Chile, and $2.99 in Costa Rica.

Netflix is also offering to migrate their personalized profile information to a new account or sub-account for those using a shared password. This will allow them to keep their viewing history and recommendations. 

Netflix would start with an alert to account holders whose passwords are being used outside their household. For some, it could be a surprise that others are accessing their account if the account holder did not intend to give them continued access. It may also create problems for Netflix as they don’t want to shut down those with family members who temporarily live away from home. And, it’s not clear what will be done for those who use their accounts at hotels that offer sign-in to Netflix. 

Nonetheless, the New York Times reported that Netflix executives had instructed employees to crack down on password sharing beginning in October 2022.  

According to the Time2Play survey, this will not likely yield the boost in revenue Netflix is hoping for. When asked, “If Netflix bans account sharing, would you pay for your own subscription?” 79% of the respondents said, “No.”  

For those with a Premium tier subscription at $19.99, an additional two outside accounts will be almost $25 per month. When asked how much would be too expensive to keep their account, the Time2Play respondents said $24.66.  

Rest assured, other services will be keeping an eye on how Netflix handles account sharing and its outcome. If Netflix can convert the outside accounts, Disney+, Paramount+, Peacock, and others will likely follow suit in charging for secondary access. 

germay0653's picture

If they do that then I drop them. For what they charge and the scarcity of new content monthly, it's just not worth it. Unfortunately, streaming service providers have become the old cable service providers! Same game, same or similar players, different transport mechanism.

Billy's picture

I have been paying for Netflix faithfully for years. Even after so much has left I am still loyal, but now they want to start nickel and diming me to death because some fat cats who have too much money already want a little more? Grow up Netflix, a little good will aimed at your public will go a long way. I bet your profits are still pretty damned good. You can't grow forever. Greed is going to kill it, and this whole country as well. This is a world where young people can't afford a house down payment because crazy rich 1%ers buy up all the stock of houses and turn them into rentals. What is this, Pottersville? Same idea here, people with more than their fair share of wealth, keep wanting more and more. You know, that never goes well in a society. Just ask the French aristocrats who ended up with close shaves. Rome fell because of wealth disparity and the corruption it brings. Heck, the American Revolution was caused a little by English debt from the French wars, but mostly because the East India Tea Company and others were too closely tied with the nobility and were allowed to gouge the colonialists. When will there come a time when the rich quietly simmer down and realize they have it pretty darn good now and giving a small share to "the little people" might be a good idea? Never, thats when. They all figure someone else will do the right thing so they can keep getting away with the old more more more for me game. Thats when societies crumble.

larrymartin's picture

The dynamics of streaming services are changing and Netflix decision to charge for password sharing reflects the challenges they face in retaining subscribers amid increasing competition. Itll be fascinating to observe if this move sets a precedent for other platforms.
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