Netflix password-sharing crackdown rolls out in the U.S.

Netflix sign-in page displayed on a laptop screen and Netflix logo displayed on a phone screen are seen in this illustration photo taken in Krakow, Poland, on Jan. 2, 2023.

Jakub Porzycki | Nurphoto | Getty Images

Netflix‘s crackdown on password sharing has come to the U.S.

The streaming service said it began alerting members on Tuesday about its new sharing policy, noting that Netflix accounts are only to be shared within a single household.

“Your Netflix account is for you and the people you live with — your household,” the company said in an email, which it posted to its blog on Tuesday.

The email goes on to say that members can transfer a profile of someone outside of their household so the person can begin a new membership they pay for on their own. Or they can pay an extra fee – $7.99 a month – per person outside of their household using their account.

On Netflix’s subscription plans page, it notes that extra members can be added to its standard and premium plans without ads.

Netflix warned it would be tightening its guidelines on password sharing in a push to boost revenue and subscriber numbers, soon after the company began seeing growth stagnate.

What Netflix plans cost

Here’s how Netflix prices its tiers in the United States:

  • Standard ad-supported (2 devices at a time): $6.99/month
  • Basic (1 device at a time): $9.99/month
  • Standard (2 devices at a time): $15.49/month
  • Premium (4 devices at a time): $19.99/month

Originally, Netflix was expected to roll out its crackdown on people who borrow other accounts to create their own profiles late in the first quarter, but alerted investors and customers during an earnings call last month that it was pushing the move until the second quarter.

The streamer has said than more than 100 million households share accounts, which is about 43% of its global user base. Netflix said this has affected its ability to invest in new content.

Earlier this year, Netflix outlined password-sharing guidance in four other countries: New Zealand, Canada, Portugal and Spain. Netflix said it would ask members in those countries to set a “primary location” for their accounts, and allow users to establish two sub accounts for those who don’t live in their home base for extra fees.

Read more: Netflix’s expected password-sharing crackdown puts college students on edge

In Tuesday’s notice, the company didn’t provide such specifics for U.S. households, and rather gave the two options of either transferring a profile or paying a fee for an extra member.

The company said it had seen its subscriber growth affected internationally where it had rolled out such initiatives during the first quarter. But Netflix still managed to add 1.75 million customers during the quarter.

In Latin America, Netflix executives said it saw cancellations after the news was announced, affecting near-term growth. But they found those password borrowers would later activate their own accounts and add existing members as “extra member” accounts. As a result, the company has seen more revenue, the execs said.

Netflix executives have likened the paid-sharing transition to that of price increases: people initially balk and cancel, then slowly return and sign up for their own accounts.

In addition to its crackdown on password sharing, Netflix also recently introduced a cheaper, ad-supported tier in an effort to boost revenue. Both measures have come in response shortly after Netflix reported its first subscriber loss in more than a decade in early 2022.

Media companies across the board have been looking for ways to make their streaming plays profitable, leaning on methods such as content cost-cutting, advertising and finding other ways to attract more customers to their platforms.

On Tuesday, Warner Bros. Discovery relaunched its streaming service as Max, which is a combination of the HBO Max and Discovery+ services.

Paramount Global also announced this week that its Paramount+ with the Showtime combined app would be available in late June. Disney has also recently announced it’s adding Hulu content to Disney+.

Source: CNBC