Netflix has been ignoring the fact that many of us use our friends’ and families’ accounts for years. However, as Netflix’s growth slows and its annual production budget for churning out new successes rises, the streaming giant looks to be reconsidering its look-the-other-way strategy. In other words, Netflix requires additional funding.
The business stated this week that it is putting a password-sharing crackdown to the test to see whether it can reduce the number of accounts that are stealing from people outside their own households. Netflix subscribers in Chile, Costa Rica, and Peru will soon be able to join up to two other individuals to their Netflix membership as sub-accounts as part of this test. This will cost roughly $3 per month in Costa Rica on top of Netflix’s monthly fee.
Netflix has been notoriously lenient about password sharing for years, with Netflix CEO Reed Hastings even describing it as a “good thing” in the past. While Netflix technically prevents users from sharing accounts “with persons outside your family,” the company has only hinted in the last year or two that it would be looking into ways to gradually implement a shared-account ban, primarily through ad hoc tests like the one unveiled this week.
But there’s something odd about this new test because it comes at a crucial time for the organization. Netflix has traditionally had tremendous membership growth, but that has suddenly slowed. Netflix needs to get imaginative about how it brings in cash, given its huge content budget of tens of billions of dollars. Going full hall monitor on shared accounts is one way to handle it, especially now that Netflix has cemented itself as a vital service in many houses.
“Netflix has let it go for a long, long time,” LightShed Partners analyst Richard Greenfield tells The Verge, referring to Netflix’s previous skepticism toward shared accounts. “When something becomes so crucial in your daily existence, things like password sharing become easier and easier to crack down on.”
That’s a fundamental distinction between Netflix and some of its smaller competitors, who are arguably vying to be a supplement to, rather than a direct competitor to, the streaming giants. Netflix, like everyone else, is raising its rates to help cover its costs, with the most recent increases slated to take effect later this month. However, while the rest of the streaming world is creating ad levels to entice members (and lessen the financial damage), Netflix has failed to do so.
WHEN IT COMES TO ACCOUNT SHARING, NETFLIX HAS LONG LOOKED THE OTHER WAY — BUT THAT HAS CHANGED.
Cracking down on account sharing, then, provides Netflix with a new way to attract paying subscribers. Password crackdowns, according to Greenfield, may be one method for Netflix to attract an additional 10 to 20 million customers in its US market, for example.
He explains, “This is how you close that final distance.”
It’s important noting that Netflix is still calling this a “test” for the time being. Netflix hasn’t completely yanked the rug out from under those of us fortunate enough to have an ex or grandfather willing to share their password — and it’s possible that Netflix will come up with a different technique than kicking us off other people’s accounts. By slamming the brakes on shared accounts, it risks alienating its own users, which isn’t ideal for any streamer vying for attention right now.
Password crackdowns, on the other hand, have long felt like a foregone conclusion in the streaming industry. Streamers aren’t producing content out of a sense of obligation. Regardless of how the current streaming squabble plays out, users will be the ones to foot the bill for their binge-watching habits.