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How Netflix’s password-sharing crackdown is likely to work


Netflix Signage next to Nasdaq MarketSite New York, U.S.A, Friday, January 21, 2022

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NetflixThe world was surprised to hear that the company plans to end password sharing, which is a widespread problem.

Shared passwords are used by more than 100 million households Netflix said TuesdayThere are 30 million people in Canada and the U.S.

However, the streaming video service doesn’t want to just freeze shared accounts. The company may instead advocate the imposition of an additional fee to those accounts that are used outside the home.

Netflix would like to capture this revenue by sending an alert to account holders who have passwords being used in other households.

This company already started a test of this featureChile, Costa Rica, and Peru. Netflix will charge an additional fee for adding “sub accounts”, which can be used to create accounts with multiple passwords. The pricing is different per country — about $2.13 per month in Peru, $2.99 in Costa Rica, and $2.92 in Chile, based on current exchange rates.

Shared password holders can also transfer their private profile information to another account or sub-account, which allows them to maintain their recommendations and viewing history.

“If you have a sister that lives somewhere else, or you just want to be able to share Netflix with them, then that’s fine,” Greg Peters, chief operating officer, said during the earnings conference call. While we don’t want to restrict sharing we do ask for a little more in order to allow her to access the service. This will ensure that both she and us get the full benefit of the service.

Netflix has not yet stated how much it anticipates to earn from the implementation of its sharing strategy globally, however Peters indicated that it will take approximately a year to implement its sub account pricing worldwide.

Time2Play conducted a survey suggested about 80% of AmericansSomeone who uses another’s password won’t be granted a brand new account. This survey did not ask how many people are willing to share their accounts with others.

Peters suggested that the company might still adjust pricing and review its testing strategy.

He said that it would take some time to find the right balance and work out this issue. Just to clarify your expectations, I think we’ll go through about a year of iterating, then deploy all that to get the solution globalized, which will include markets like the United States.

Unanswered questions

Netflix’s plans are unprecedented. Password sharing has never been an issue with any major streaming service. Some other owners of streaming platforms include Disney, Warner Bros. Discovery, ComcastNBCUniversal is and Paramount GlobalAfter reviewing Netflix’s password sharing reforms, a person will not likely set up their own plans.

Many account holders are likely to be stunned when Netflix informs them that they have their passwords being shared. Netflix doesn’t say how long they will allow people watching from a shared account access, if not paying the extra fee.

Netflix must also be careful about defining password sharingrs in order to prevent people being wrongly identified as abusers (e.g. family members who are temporarily away from their home).

An unwillingness to act against this group of users would probably save millions of people from Netflix’s crackdown — at least to begin with.

Rich Greenfield of LightShed Partners, media analyst, said “They will start with serial abusers.” “It’s very easy to get rid of 15 people who use your account.

Also, the company doesn’t want to see its employees get involved in disputes regarding what is a home account or what is a sub-account. Staffers as well as customers could be hurt if they disagree with the definitions. Customers have always seen Netflix to be a service. best-in-class brand.

Greenfield stated that Netflix knows your identity, regardless of whether you use your personal profile.

Netflix encouraged password sharing five years ago. At the time, Netflix believed that it wanted to increase its visibility and create buzz so subscribers would sign up. This strategy paid off. Netflix subscriptions have grown every quarter for more 10 years — until last quarter.

Netflix’s Corporate Account tweeted in 2017, “Love is Sharing a Password.”

The company would be delighted if you stopped doing this.

Disclosure: CNBC’s parent company is NBCUniversal, Comcast.

WATCH: Netflix charges an additional fee to share passwords