Netflix to begin crackdown on password sharing in coming months

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Streaming giant Netflix will begin its stringent measures on password sharing in the first quarter of this year, after the company announced its earnings report to shareholders last week.

The practice of sharing passwords with people outside the subscriber’s home will become more complex and require an additional fee to share a single subscription in multiple locations.

“While our terms of use limit use of Netflix to one household, we recognize that this is a change for members who share their accounts more broadly,” Netflix said in its report to shareholders.

“While making paid sharing available, 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. As today, all members will be able to watch while traveling, whether on TV or mobile.”

Based on testing of new and stricter rules in selected Central and South American countries last year, the company acknowledged that it expects a negative reaction in the short term.

Related: Netflix co-founder Reed Hastings steps down as CEO of streaming company

“As we work on this transition – and as some borrowers stop tracking because they either don’t convert to extra members or don’t convert to full paying accounts – near-term engagement, as measured by third parties like Nielsen’s The Gauge, could be negatively impacted.” said in the statement.

“However, we believe the pattern will be similar to what we’ve seen in Latin America as we continue to offer a large programming list and allow borrowers to sign up for their own accounts.”

Netflix wasn’t more specific about when the strict measures will begin “later in the 23rd Quarter”.

The new model could see Netflix users in Australia paying an extra AUD $4 per month, for example, if trials in Costa Rica, Chile, Peru, Argentina, El Salvador, Guatemala, Honduras, and the Dominican Republic were a guide last year. Because password sharing is especially common in these countries, these countries were targeted by the company.

No restrictions were placed on subscribers’ mobile devices such as smartphones, tablets or laptops to allow legitimate users to access their accounts while traveling.

But the new system could stop you from logging into your account to watch a Netflix show at a friend’s or relative’s home and sharing a single subscription across multiple homes.

Chengyi Long, Netflix’s director of product innovation, explained how the new system might work in an updated blog post in October. Only one home is allowed on a single Netflix account, but can be used on multiple devices. An additional monthly fee will apply for adding additional households ($2.99 ​​in most Latin American countries). While traveling, the account can only be accessed via a tablet, laptop or mobile phone. Subscribers will be able to log in to remove unwanted households from their accounts.

“The widespread account sharing between households today undermines our ability to invest long-term and improve our service,” he said.

“That’s why we’re carefully exploring different ways for people who want to share their accounts to pay a little more.”

Related: UK copyright watchdog says it’s illegal to share TV broadcast passwords

In 2022, Netflix lost 200,000 customers in the first quarter alone and acknowledged that it expected to lose another two million in the second quarter. The company attributed the decline to a number of factors, including increased competition and the war in Ukraine.

Long did not reveal how Netflix plans to implement the new system.

In Latin America trials, if a change in the location of an used account is detected for more than two weeks, the account holder will receive an in-app notification with the option to change their home address or pay a fee to add the new address. .

Netflix co-CEO Greg Peters admitted in an interview with Variety on Jan. 19 that the crackdown on shared passwords “will not be a universally popular move” and that the company will begin enforcing the new regime by giving “a gentle tact” to customers who continue to share accounts. . poke” to pay extra for multi-digit usage.

In its report to shareholders that same day, Netflix reported a total of 231 million paid subscriptions in 2022, generating $32 billion in revenue and operating income of $5.6 billion.

Netflix Australia declined to comment, saying last week’s shareholder communication on the matter was the most current.

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