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Every three months Brandy Andersen fills her Jeep with clothes, kitchen utensils, a fan and a small TV and moves to a new city. Andersen has been a traveling emergency room nurse for three years, has worked in Brooklyn, Boston and DC and now lives in a remote part of Northern California.
But her home, her husband, and her primary Netflix address are all thousands of miles away in Midland, Georgia.
Andersen is one of many longtime Netflix customers who are upset about the company’s new crackdown on password sharing, which rolled out in the US this week, that would prevent them from streaming on the go. After years of ignoring and even encouraging password sharing, the streaming company is asking anyone who’s logged into Netflix at another location for more than 31 days to set up a separate account, or $7.99 each Pay monthly to add it to the main account.
Affected Netflix users have taken to social media to complain about the new policy, with some even threatening to quit or switch to competitors with more lax sharing requirements like Disney Plus and Max.
“I’m not paying another $8 more, I’m just not paying it,” says Andersen, who wants to cancel her $19.99-a-month premium plan. “I pay a lot anyway. I understand that the price will have to increase over time – that didn’t bother me at all – but now to say I can’t use it for myself anymore? That’s crazy.”
Can Netflix weather the backlash?
Netflix hasn’t rushed this plan and has likely taken that into account some public anger and loss of some subscribers. The company began testing enforcement in smaller markets last year and rolled it out in Canada this year. According to analysts, a small churn is expected, which is likely to be temporary.
“In every market there is an initial outrage,” said Rich Greenfield, media analyst at LightShed Partners. “Then they publish content that people can’t live without, [and] Two months later, their numbers are up.”
According to Greenfield, the company should focus solely on popular, high-quality shows and films. “The best way to get people to sign up for their own account, or as an additional account, is with content they literally can’t live without.”
In an April survey, Wedbush Securities asked current and new Netflix customers what they would do after a raid. Around 40 percent said they had no intention of making changes to their subscription, 30 percent said they would join or create a family or group plan, and 15 percent said they would cancel or leave Netflix.
“It seems like only the squeaky wheels are coming online to voice their grievances. I assume most are just piggybackers who are upset that they have to pay,” said Alicia Reese, an equities analyst at Wedbush.
Not all Netflix customers are upset about the move. Some were glad the company resisted “free riders,” especially if it meant more revenue for their favorite shows or if it stopped increasing their own monthly fees. According to Netflix, 100 million people worldwide stream from borrowed accounts.
“We subscribers either get higher rates or less service than we would otherwise get if the free riders spit out the subscription fee,” Pittsburgh resident Diane Averill said in an email. “And Netflix employees could get better wages if the company was more profitable, so a lot of people may get scammed by the scammers.”
Netflix declined to comment on users’ reaction.
“This is an important transition for us, and as such, we’re working hard to make sure we make it well and as thoughtfully as possible,” Netflix co-CEO and director Gregory Peters said in the company’s recent earnings announcement. He said that in countries where the company rolled out the new policy, there will be an initial batch of terminations, followed by password borrowers signing up for their own accounts and members paying for additional people.
Netflix said in a letter to shareholders in April that in Canada, which it says is a “reliable indicator for the US,” our paid membership base is now larger than it was before paid sharing was introduced, and revenue growth has accelerated and is now growing faster than in the US”
What’s next for affected streamers?
Some people find themselves in situations where paying more money just doesn’t make sense. For example, paying subscribers who split their time between different locations, whether for work reasons, because they have a vacation home, or for family reasons.
But a lot of people who’ve received notifications are the very people Netflix is likely targeting: parents sharing the account with college students, grown children sharing accounts with their elderly parents, and groups of friends splitting the cost of a few subscriptions split.
Years ago, Ammy Woodbury and her friends opened a premium Netflix account together. She says she understands the company believes its business model is no longer working, but the change has caused the group to cancel.
“I guess we’ll probably subscribe for a month or two a year to catch up on ‘Stranger Things’ and ‘Wednesday’ and see some movies. But then we will close it again,” said Woodbury, 49, who lives in Santa Clara, California. “They’ve forced me to actually assess how much I value them, and the answer is definitely less than $10 a month, probably less than $50 a year.”
When the new options first went live in Canada in February, Sarah Taylor reluctantly agreed to pay the additional amount. She shares her account with her retired parents so they can watch Bridgerton and British Crimes. But when Netflix later said that she actually had to upgrade her basic account to qualify to accept members, Taylor urged the company to stop for good.
A customer service representative told her that she could keep sharing her account if she streams from her phone for a few minutes, drives 25 minutes to her parents’ house, streams again from her phone over their wifi, and finally logs back into her account from her TV. She was told to do it every 14 days and only pay her original $9.99 per month. She decided not to cancel.
“They’re crazy,” says Taylor. “A lot of people will get rid of Netflix. I know a lot personally.”
For Courtney Levin, it’s less about the money and more about Netflix breaking an unspoken agreement. Levin also pays for an account she shares with her elderly parents, but she plans to quit.
“When they first switched from DVD to streaming, they kind of sneakily promoted that you share your passwords,” Levin said. “We all have multiple accounts, Prime, Max, Disney. It’s not that we’re not willing to pay for the things we want. It’s like you built your service on the brand that you could share with your family and now you’re changing it.”
There is no shortage of alternatives. But for anyone considering a switch to continue sharing, Wedbush’s Reese warns that it could follow in Netflix’s footsteps in the future.
“Netflix will lead the way here and I expect other streamers will follow suit over time.”
What Exactly Are Netflix’s Password Sharing Rules?
While Netflix has been talking about its password plans for the last year, the notifications that rolled out in the US this week took effect immediately and surprised some people. Many were confused about how the company would enforce the plan and were surprised to find that it applied to them. Here’s what we know so far:
- According to Netflix, an account can only be used by members of a physical household sharing an internet connection. Additional members who sign up from elsewhere can be added for $7.99 per month.
- For now, the restrictions appear to only apply to TVs and not mobile devices. Once you’ve successfully signed up on a smartphone or tablet, you should be able to stream to it from anywhere.
- You can still travel for up to a month without any problems. Every 31 days, users must connect to the primary site to avoid being logged out of the account.
- If you move or plan to be away for more than 31 days, you can change the location of your household.
- It doesn’t matter what tier you’re paying for or why you’re not at the main address. The company knows no exceptions for more unusual cases such as the deployment of military personnel.
- Netflix primarily uses IP addresses to determine where people are logging in from, but also uses device IDs and account activity.
- From this it is derived which location is your home location. However, you can also set your household location manually via Netflix on a TV by going to Help → Manage Netflix Household.
- You can only add additional members to the more expensive Standard and Premium plans and the number of additional members is limited. (One extra for the standard version, two members for the premium version.)
- There are no penalties for sharing, no Netflix police going door-to-door. People streaming from secondary locations are simply unsubscribed.
And here’s a guide to navigating the expensive landscape of streaming and digital entertainment.