Netflix plans to launchin the US, who share their password to the streaming service before the end of March. But how exactly would that work?
Initial reports and trials in other countries suggest that the effort to discourage password sharing will be relatively gentle in its first iteration, relying on a combination of technology and user conscientiousness to encourage serial oversharers to pay more for the privilege.
Netflix will likely use a person’s geographic location, as determined by the IP address of any Internet-connected device, to figure out which people count as “household members” living together, Insider reporter Sarah Saril told CBS News.
“If you’re looking at a TV, it will give exactly where you are,” Saril said. “They only want people in your household, at your address, watching.”
Netflix says on its website that the company uses “IP addresses, device IDs and account activity from devices signed into the Netflix account” to determine which devices are in the same household.
“People who don’t live in your household will have to use their own account to watch Netflix,” the site says.
Netflix told investors last week that it would introduce stricter sharing rules by the end of March. More than 100 million households currently share Netflix passwords, the service said. That “undermines our long-term ability to invest in and improve Netflix,” the company said in a statement accompanying the latest quarterly earnings.
In 2022, Netflix restricted password sharing in Latin America and asked members to pay an additional fee to share their accounts with non-household members. The effort had mixed results.
Tech publication Rest of World called the test “a mess” and reported that the new policy was rolled out inconsistently. Many users were able to avoid the extra fees, while others were asked to pay more and responded by canceling their accounts, the outlet said.
Netflix predicted a similar response in the U.S. “From our experience in Latin America, we expect a cancellation response in every market when we roll out paid sharing,” the company told investors, noting that could hurt its viewership in the short term.
Netflix has said it recognizes the new policy is a big change for customers, and it has tried to cushion the blow by touting new features aimed at making the transition less painful. That includes letting members view all devices using one account and making it easy for people to transfer individual profiles to separate accounts. Last fall, the service also introduced a dashboard that lets account users log off individual devices.
Netflix has not specified how much these sub-memberships might cost. But in trials in Chile, Costa Rica and Peru, sub-memberships increased the monthly cost of an account by a quarter or a third, according to Variety.
“That’s where these tough conversations come in – who is worth paying an extra quarter of your subscription price every month?” Saril laughed.
If Netflix finds that too many locations are using the same account, it will implement a technological grunt: a prompt that asks users to “verify” some devices via authentication codes.
“When a device outside of your household logs into an account or is used persistently, we may ask you to verify that device before it can be used to watch Netflix,” notes a company FAQ.
However, Netflix also says that users will not be automatically charged if the system detects too many location streams, nor will accounts be canceled. That has led some observers to question how effective the password cracker will really be.
“All signs suggest that the most aggressive Netflix intends to get into in the first iteration of the paid-sharing rollout is to keep nudging violators with email reminders and notifications,” Todd Spangler wrote in Variety in November.