Netflix customers could soon be prosecuted next year for sharing their password.
According to The Wall Street Journal, the popular streaming service plans to end password sharing by early 2023.
Netflix has been exploring ways to address this for some time, and this is the first official announcement that the changes are finally happening.
The company claimed that of the 222 million homes around the world with valid subscriptions, at least “100 million additional homes” used its services via password sharing.
Households using Netflix via password sharing reportedly include more than 30 million households in the United States and Canada, Newsweek reported.
Netflix offers joint accounts with separate profiles and multiple streams in its plans, but only people living under the same roof apply.
The online media platform has been losing revenue to unauthorized password sharing for years, but has been willing to ignore the matter due to a surge in subscriptions over the past two years.
However, revenue has been falling since the beginning of this year as it sees a drop in subscribers for the first time in a decade.
The company introduced fees for person accounts who don’t live in the same household to stem a drop in subscribers.
The sharing of subscriptions has also made it difficult for the company to expand its service and productions into new markets, according to the company.
The Netflix logo on their office building in Hollywood, California on January 20, 2022. (Robyn Beck/AFP via Getty Images)
Netflix’s Terms of Service never allowed multi-household sharing, which stated that “the member who created the Netflix account and whose payment method will be charged” is responsible for all activities that occur through the account.
“In order to maintain control of the account and prevent anyone from accessing the account, the account holder should retain control of the Netflix-enabled devices… and not disclose the password or payment method details associated with the account to anyone.” the conditions.
“We may terminate your account or suspend your account to protect you, Netflix, or our partners from identity theft or other fraudulent activity.”
It previously considered offering pay-per-view content to discourage those with accounts from sharing their passwords, but company executives voted against that plan.
Netflix execs are enforcing sharing rules due to lost revenue
Meanwhile, Reed Hastings, Netflix’s co-CEO, decided that now was the time to address the password-sharing issue that had been neglected for too long.
His co-CEO Ted Sarandos agreed, saying the streaming service is finally cracking down.
Viewers generally oppose price increases, and the company needs to find a way to solve the sharing problem so people “see” the value of the company, Sarandos told CNBC.
“There are people today who enjoy Netflix for literally free,” Sarandos said.
“So they get a lot of value out of it. I think they will be happy to have their own account.”
Netflix will gradually phase out password sharing over time, rather than ending it immediately to avoid offending customers, and will require those who share accounts with others outside their household to stop paying by 2023 begin.
Users are tracked to enforce restrictions on unsubscribed users
Those who continue to share an account outside of the main subscriber’s immediate household will have to pay additional fees under the new rules.
Netflix said it could potentially charge just under its ad-supported plan of $6.99 for non-household users to boost sales, and wants those illegally sharing passwords to sign up for their own subscription.
The streaming service expects to roll out other ad-supported subscription plans over time.
For example, Netflix’s current premium plan allows for Ultra HD 4K streaming and support for simultaneous viewing on four supported devices such as iPhones, iPads, and Macs, as long as those devices belong to people in the same household, but doesn’t allow multiple viewers outside of it view household.
The company will consider tracking certain information such as device IDs, IP addresses and account activity to determine if viewers are part of the same household to enforce the new rules, The Dallas Morning News reported.
The online video service had tested additional payments for sharing passwords for an additional fee of $3 in some Latin American countries.
The trial program reportedly prompts primary account holders to provide anyone outside their household with a verification code to access their account, and repeatedly asks for the code until a monthly fee is paid to add non-household subscribers.
A similar method could be rolled out to users in North America over the next year.
Bryan S. Jung is a New York native and resident with a background in politics and the legal industry. He graduated from Binghamton University.