It’s a commonplace in the business world that it’s harder and more expensive to acquire a new customer than it is to keep an old one, so streaming giant Netflix has announced it’s ending “password sharing” as a way to generate more revenue from people who are already using their service. The company hopes that by restricting the ways people can share their account password, they’ll force users who aren’t currently paying for the service (but who use it thanks to a friend or family member) to sign up. It’s not a popular program with customers, but we won’t know if it was a good idea until it’s implemented.
So when is that? Well, there’s no exact date yet, but the short answer is sometime next month.
It may seem short-term, but the streaming giant has been saying publicly for years that they interpreted password sharing as a major problem, and in 2022 they began saying they plan to take action to limit it. This is one of those situations where many people didn’t take the “warnings” seriously, and now they are shocked that the change is coming so quickly.
As described in the policy, the primary location for a Netflix account is sort of a home base, and that home network becomes the only place you can use your account without jumping through a bunch of hoops. If one of your authorized devices does not connect to the home network at least once every 31 days, the device will be blocked. If users try to sign in from another network, Netflix blocks access and asks users to sign up for their own account.
The problem facing Netflix is an industry that requires constant growth. Right now they have so many subscribers that significant growth is becoming harder than ever. They estimate that there are about 100 million people who hitchhike for someone else’s account, legitimate or not, and that by forcing those people to open their own accounts, they can increase their earnings. Some existing customers may be angry, and a few may even leave, but traditionally, people threaten to leave Netflix much more often than they do actually leave Netflix.
Last year, Netflix took a different approach to password sharing in some international markets, charging a $3 fee to users who allowed others to use their account. That change proved unpopular, so Netflix came up with a different approach before introducing restrictions in North America, their largest market.