How Netflix Plans to Crack Down on Password Sharing

Netflix is not having the best time in 2022.

After reporting their biggest loss of subscribers in 10 years, Netflix blamed password sharing as one of the reasons behind the significant drop in subscribers, and they also recently announced plans to crack down on password sharing. How exactly do they plan to do this? We have details here.

According to CNBC, Netflix claims that over 100 million households worldwide use a shared password (which amounts to 30 million in the U.S. and Canada) and Netflix plans to enact a new pricing plan to combat password sharing, which could take a year to fully roll out globally.

©Netflix

CNBC reports that Netflix’s new process would involve adding an extra fee to account holders with shared passwords, and they would start by sending notifications to applicable accounts, along with giving customers the options to transfer their profile to a new or “sub account,” also known as an account paying a fee to share a password.

Netflix has already begun testing this new feature in Peru, Chile, and Costa Rica, where accounts with up to two people living outside the household have been charged a fee ranging from $2.13 to $2.99 per month, depending on the country.

Netflix Chief Operating Officer Greg Peters says that the goal of this new fee is not to shut down all password sharing, but to ensure they “get the revenue associated with that viewing.” Peters said that this new pricing structure could take time to implement and find the right pricing.

Netflix will be the first streaming company to charge customers for password sharing and time will tell just how Netflix will determine who is sharing a password or how to separate people traveling or temporarily living in another location. According to CNBC, LightShed Partners media analyst Rick Greenfield suggested that Netflix will “start with serial abusers” by specifically targeting, for example, an account with 15 people sharing one password.

Ironically, CNBC reported that Netflix encouraged password sharing five years ago as a way to get more views on their content. Things have changed, and we’ll be watching this developing situation closely. Stay tuned to AllEars for more news from Disney and beyond!