EXECUTIVE SUMMARY:

Netflix once tweeted “Love is sharing a password” but the company is breaking up with password sharing.

At that point in time, the company’s strategy focused on getting eyeballs glued to screens. Netflix didn’t much care about who shared passwords, as long as millions of people were watching Netflix shows and movies.

But now, Netflix is struggling financially due to competition and an economic downturn. In a three month window, the company lost nearly a million subscribers. The company is attempting to recoup what is arguably missed revenue.

According to Netflix, “Today, over 100 million households are sharing accounts – impacting our ability to invest in great new TV and films.”

The end of sharing accounts and passwords

To fix the financials, Netflix is rolling out major changes to account sharing. Effectively, people who do not inhabit the same living room and who do not use the same devices will not be able to share passwords.

But after trialing changes in Latin America, Canada and Portugal, Netflix has faced fierce backlash over “password policing.” Users are saying that it is perhaps a bridge too far.

How could Netflix know if you share account access?

The streaming giant consumes information instead of movie theater popcorn, of course. Netflix collects data pertaining to what you watch, the location of your home, your IP address, and your device IDs.

Right up until the company began to see backlash, Netflix planned to enforce the end of password sharing by asking viewers to ‘check in’ from their devices on a monthly basis.

For instance, if you were sharing an account with a college-aged child of yours, they could only continue to use the account if they were able to ‘check in’ on their devices from your home every month.

To assuage concerns, Netflix said, “As we roll out paid sharing, members in many countries will…have the option to pay extra if they want to share Netflix with people they don’t live with.”

Since seeing widespread backlash, the company’s plans appear less certain, although they may stay the very same – it actually remains unclear.

Should you transfer your friend or family members’ profile?

By way of encouraging people to set up individual accounts, Netflix has established a Transfer Profile webpage.  “People using an account can now easily transfer a profile to a new account, which they pay for – keeping their personalized recommendations, viewing history, My List and saved games,” says Netflix. This offers a proactive means of complying with Netflix’s anticipated policy that prohibits extended account sharing.

Will a Netflix password crackdown coax users elsewhere?  

In a recent survey, over 60% of 380 individual Netflix password borrowers said that they would stop using Netflix if a password crackdown takes effect. The password policy would not inspire them to invest in their own Netflix subscription.

Many other streaming services do not have account-sharing restrictions. And those that do (like Disney+ and Hulu) haven’t done much to actively discourage password sharing.

Some experts posit that former Netflix watchers may rediscover illegal streams, torrents and other video watching methods that were popular prior to the surge in streaming.

The end of password sharing: Will it result in a new level of profitability?

The Netflix account/password sharing policy, coupled with a recently launched ad-supported tier, are seen as meaningful profitability drivers.

Other companies may jump on the bandwagon, especially as consumers continue to increase entertainment platform credential sharing in the wake of high inflation. It’s possible that Netflix’s policy will become a fixture in the new normal – across multiple companies.

For more Netflix insights, please see CyberTalk.org’s past coverage.

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