Why Netflix is ​​cracking down on password sharing

Why Netflix is ​​cracking down on password sharing

Netflix has for years ignored the fact that many of us have been shutting down the accounts of our friends and families. But the streaming king is now rethinking its look-the-other-way policy, a change that sees Netflix's growth slow and its annual production budget for new hits ever higher. In other words, Netflix needs more money.

The company announced this week that it is testing a password-sharing action that could curb the number of accounts that can lock account holders out of their homes. As part of this trial, Netflix will soon offer users in Chile, Costa Rica and Peru the ability to add up to two additional members to their Netflix subscription as sub-accounts. In Costa Rica, it will cost around $3 on top of Netflix's monthly cost.

Netflix has been extremely lax about password sharing over the years, with Netflix boss Reed Hastings calling it a "positive thing" in the past. While Netflix technically bars users from sharing accounts "with individuals outside of your household," the company has only indicated over the past year that it plans to gradually implement a shared-account action. Used to be. The discovery, mostly through equally stray tests, was announced this week.

But something about this new test feels different, as the latest experiment comes at a crucial moment for the company. Netflix has long enjoyed explosive subscriber growth, but lately, it's starting to wane. Compared to its astronomical content budget balanced in the tens of billions, Netflix needs to get creative about how it's bringing in cash. Going full hall monitors on shared accounts is certainly one way to do this, especially since Netflix has cemented itself as an essential service in many homes.

"Netflix has let this go on for a long, long time," Lightshade Partners analyst Richard Greenfield told The Verge. Talk about Netflix's previous ambition for shared accounts. "When something becomes so important to your daily life, it makes it easier and easier to crack down on things like password sharing."

That's a key difference between Netflix and some of its scrappier rivals, which are competing for supplements, rather than being direct competitors to the top dogs in streaming. Like everyone else, Netflix continues to hike its prices to help offset those costs, with its latest price hike due later this month. But while everyone in the streaming sandbox is introducing ad tiers to entice subscribers (and soften the blow to the wallet), Netflix has yet to follow suit.

After cracking down on account sharing, Netflix offers an alternative route for adding paying members. Greenfield says the password crackdown is one way Netflix adds 10 to 20 million subscribers to its US market, for example.

"That's how you close that remaining gap," he says.

It's worth bearing in mind that Netflix is ​​still calling this a "test." Netflix hasn't completely pulled the rug out from under those of us who have an ex or grandparent who doesn't mind sharing their passwords — and it's possible that Netflix is ​​giving us accounts from outsiders. Ho. This will force booting to an alternative strategy. of our own homes. Bringing down the hammer on shared accounts runs the risk of alienating your own users, which isn't ideal for any streamers competing for attention right now.

But at the same time, Password Crackdown has long seemed like a definite outcome in streaming. Streamers aren't cranking out the content out of the goodness of their hearts. While the current streaming dustup is shaken, its users themselves who will pay the tab for their streaming regimen.