Netflix plans password sharing crackdown

Netflix has said that it’s looking to tackle people sharing the account passwords, as the streaming service responds to a fall in subscriber numbers.

The streaming service saw its overall number of households drop by 200,000 in the first three months of this year, the first time it has seen a quarterly drop in net total customers since October 2011.

While there are a number of headwinds facing Netflix, including competition from rival streamers, the company has been quick to highlight the number of customers sharing passwords with other households as one source of potentially lost revenue and subscriber numbers. In a letter to shareholders, Netflix alluded to cracking down on that practice.

It’s not a new phenomenon by any means. In 2016, a study from Parks Associates found that 11 per cent of all US households relied exclusively on shared accounts when using subscription VOD services. In that same year, Netflix CEO Reed Hastings said there we “no plans on making any changes” over account sharing.

“Password sharing is something you have to learn to live with, because there’s so much legitimate password sharing, like you sharing with your spouse, with your kids,” he commented at the time.

Now, however, he has changed his tune, speaking this week about finding a “more effective monetisation of multi-household sharing”. Indeed, it may not necessarily be a strict crackdown that the streamer has in mind: it has been running a trial Chile, Costa Rica and Peru that allows customers to share accounts with additional households at a discounted rate, which may well be rolled out to additional countries.

The move would be similar to Spotify, Amazon and Apple’s family sharing account plans, although with Netflix having recently increased its prices – one of the factors that has led to a fall in subscriptions – the idea of asking people to add another few pounds on top of their monthly fees to share Netflix with friends may not be very appealing.

Hastings acknowledged in his letter that “sharing likely helped fuel our growth by getting more people using and enjoying Netflix”, but with more than 100 million households estimated to be sharing their Netflix passwords, and with Netflix forecasting a 2 million drop in subscribers in the coming three months, the problem will be high on Netflix’s priority list in the near future.

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