The great Netflix password investigation has begun.
The streaming giant sent out an email on Tuesday to US members who share their accounts with people living outside their households, making it clear that it would start kicking people off the service if they used someone’s account for more than 30 days while on the internet. found another location.
For households willing to pay for an extra person to access their account, Netflix said it would charge an additional $7.99 per person. Otherwise, it would encourage those users to create an account themselves. (Netflix allows users to transfer their existing profiles to a new account to save their algorithm.)
The news came as no surprise. More than a year ago, in April 2022, the company announced its first subscriber loss in 10 years, attributing the decline in part to shifting economic forces and increased competition from other streaming services. It said at the time it would look at ways to increase revenue, including adding a cheaper level of advertising and cracking down on password sharing between households. Netflix estimated that 100 million people worldwide accessed their streaming service without paying for it.
Netflix now offers a variety of pricing options, from $6.99 per month on the low end for an ad-supported version, to $19.99 per month on the high end for an ad-free version and allowing subscribers to add two other members for an additional $7.99 per month, per person.
Some Netflix subscribers have taken to Twitter to voice their displeasure with the new strategy, noting that the company had been encouraging users to share their passwords with others for years.
But that was a different time, a time when Netflix reigned as the only streaming service in town. Now consumers have a plethora of choices, from Disney+ to Warner Bros. Discovery’s recently launched Max to Peacock and Paramount+ and many others. And Netflix’s efforts to generate more revenue per subscriber come as many consumers feel the economic pressure from inflation.
With the new policy also coming in the middle of the writers’ strike, some influential writers encouraged users to cancel their Netflix accounts in solidarity with the writers.
Still, the displeasure is not unexpected at Netflix. The company has spent the past year testing the strategy in smaller markets such as Canada, New Zealand, Spain and Portugal. It said in its most recent letter to shareholders that the initial response to password restrictions is a “cancellation response in any market,” followed by “increased acquisition and revenue” after the borrowers activate their own accounts.
In Canada, where Netflix laid out the strategy in the first quarter of this year, the company wrote that “our paid member base is now larger than it was before the launch of paid sharing and revenue growth has accelerated and is now growing faster than in the US. ”
