Netflix begins eliminating password sharing

The great Netflix password campaign has begun.

The streaming giant sent an email on Tuesday to US members who share their accounts with people who live outside their household, which explained that it would begin kicking people off the service if they were using someone’s account for more than 30 days while they were in a different location. ..

For households that want to pay a fee for an additional person to access their account, Netflix said it will charge an additional $7.99 per person. Otherwise, it will encourage such 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 did not come as a surprise. Over a year ago, in April 2022, the company reported its first subscriber loss in 10 years, attributing the drop in part to shifting economic forces as well as increased competition from other streaming services. It said at the time it would look for ways to increase revenue, including adding a cheaper ad category and cracking down on password sharing between 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 per month on the low end for the ad-supported version, to $19.99 per month for the version without ads and allowing subscribers to add two more members for an additional $7.99 per month per person.

Some Netflix subscribers took to Twitter to express their displeasure with the new strategy, noting that for years the company encouraged users to share their passwords with others.

But that was a different time, when Netflix reigned supreme as the only streaming service in town. Now consumers have a plethora of choices, from Disney+ to Warner Bros. Max to Peacock, Discovery’s Paramount+, and many more have been launched. Netflix’s efforts to generate more revenue per subscriber come at a time when many consumers are feeling the economic pressure from inflation.

With the new policy also occurring in the middle of a writer’s strike, some influential writers have been encouraging users to cancel their Netflix accounts in solidarity with writers.

However, the resentment is not unexpected by Netflix. The company has spent the past year testing the strategy in smaller markets such as Canada, New Zealand, Spain and Portugal. In its latest letter to shareholders, it said the initial reaction to restricting passwords was “a reaction to cancellation in every market” followed by “increased acquisition and revenue” after borrowers activate their own accounts.

In Canada, where Netflix dictated the strategy in the first quarter of this year, the company wrote that “our paid membership base is now larger than it was before paid sharing launched and revenue growth has accelerated and is now growing faster than the US.”