The great Netflix password crackdown has begun.
The streaming giant sent out an email Tuesday to US members
who are sharing their account with people living outside their household that
made clear it would begin kicking people off the service if they were using
someone’s account for more than 30 days while at a different location.
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For households willing to pay for an additional person to
have access to their account, Netflix said it would charge an extra $7.99 per
person.
Otherwise, it said, it would encourage those users to sign
up for an account themselves. (Netflix allows users to transfer their existing
profiles to a new account to save their algorithm.)
The news was not a surprise. More than a year ago, in April
2022, the company announced its first subscriber loss in 10 years, attributing
the decline, in part, to shifting economic forces as well as increased
competition from other streaming services. It said at the time that it would
look for ways to increase revenue, including adding a cheaper ad tier and
cracking down on password sharing among households. Netflix estimated that 100
million people worldwide were accessing their streaming service without paying
for it.
Netflix offers a variety of pricing options now, from $6.99
a month on the low end for an ad-supported version, to $19.99 a month on the
high end for a version that doesn’t include ads and allows subscribers to add
two other members for an additional $7.99 a month, per person.
Displeasure taken to Twitter
Some Netflix subscribers have taken to Twitter to voice
their displeasure with the new strategy, noting that the company for years had
encouraged users to share their password with others.
But that was a different time, one when Netflix reigned as
the only streaming service in town. Now consumers have a plethora of choices,
from Disney+ to Warner Bros. Discovery’s newly launched Max to Peacock and
Paramount+ and many others. And Netflix’s efforts to generate more revenue per
subscriber come as many consumers are feeling the economic strain from
inflation.
With the new policy also occurring in the middle of the
writers’ strike, some influential writers were encouraging users to cancel
their Netflix account in solidarity with the writers.
Still, the displeasure isn’t unexpected by Netflix. The
company has spent the past year testing the strategy in smaller markets like
Canada, New Zealand, Spain, and Portugal. It said in its most recent letter to
shareholders that the initial reaction to limiting passwords is a “cancel
reaction in each market” followed by “increased acquisition and revenue” after
the borrowers activate their own accounts.
In Canada, where Netflix imposed the strategy in the first
quarter of this year, the company wrote that “our paid membership base is now
larger than prior to the launch of paid sharing and revenue growth has
accelerated and is now growing faster than in the US.”
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