Netflix may crack down on sharing accounts and passwords; understand what it means

Netflix shares tumbled this week after the platform reported its first loss of subscribers in more than a decade. There is one factor that the company has identified as detrimental to revenue: the widespread sharing of passwords. Does this mean the company is about to kick millions of viewers from shared accounts? Not exactly.

But that could mean Netflix subscribers around the world would have to make an effort to keep their kids, friends or colleagues on their accounts.

For years, Netflix has allowed subscribers to share their passwords with little interference. Indeed, the service admitted in its letter to investors on Tuesday that the policy likely helped spur its growth by “getting more people to use and enjoy Netflix.”

However, that growth has severely stalled, and Netflix said it is now investigating the “best way to monetize the platform”. The company also noted that of its 222 million paying households worldwide, it estimates that Netflix is ​​shared with over 100 million additional households.

This could be the end of password sharing

What does this mean for your account? It’s still unclear as Netflix is ​​in the early stages of figuring out how to make more money by sharing accounts.

Last month, the company said it had been working for a year on ways to “allow members who share away from home to do so easily and safely, while paying a little extra.” Translation: you will have to pay for those extra people on your account.

The company launched two test features in three foreign markets called “Additional Membership” and “Profile Transfer”. Costs vary based on a number of factors, but Netflix said features can be added for “a fraction of the price of a basic plan.”

With “Additional Membership”, Netflix Standard and Premium subscribers can add up to two people who don’t live with them to one account.

These “additional” members will have full access to the main Netflix account and will have their own profiles and login. Additional subscriptions will not count towards Netflix’s overall paid subscriber numbers.

So if you have someone on your Netflix account who doesn’t live in your house (a kid in college, a friend, a distant cousin, whatever), you’ll pay extra for access.

The “Profile Transfer” option allows subscribers of any price tier to transfer their profile information, i.e. their viewing history, to a new paying account.

Both features are being tested in Chile, Costa Rica and Peru. Netflix typically tests new features in smaller markets before rolling them out on a larger scale, and at this point it’s unclear whether “Additional Member” or “Profile Transfer” will become a bigger offering or will be dropped.

However, with the company’s stock plummeting and investors questioning its future growth potential, it’s a good bet that these or similar options could be implemented sooner rather than later.

This is how streaming works

“We have always tried to facilitate shared use within a member’s home, with functions such as profiles and multiple transmissions. If they have been very popular, confusion has been created about when and how you can share Netflix with other homes”, said the company on Tuesday. “While we can’t monetize everything right now, we think it’s a great opportunity in the short to medium term.”

On the other hand, making customers pay for the privilege of sharing their accounts can backfire. Netflix already raised its prices earlier this year; additional costs can alienate your base.

The company is still in the early stages of figuring out how to monetize password sharing, and if Netflix curbs the practice, other services are likely to follow suit. As a benchmark in the streaming world, Netflix’s decision could have ramifications across the industry.