How will Netflix prevent you from sharing your password?

Netflix plans to start crack down on subscribers in the US who share their password for the streaming service at the end of March. But how exactly would that work?

Initial reports and tests in other countries suggest that the effort to discourage password sharing will be relatively mild in its first iteration, relying on a combination of technology and user awareness to entice serial users to pay more. for the privilege.

Netflix is ​​likely to use a person’s geographic location, determined by the IP address of any Internet-connected device, to determine which people count as “household” members living together, Insider reporter Sarah Saril told CBS News.

“If you’re watching on a TV, it will tell you exactly where you are,” Saril said. “They just want people in their home, in their direction, watching.”

Netflix says on its website that the company uses “IP addresses, device IDs, and account activity of devices registered to the Netflix account” to determine which devices are in the same household.

“People who don’t live in your household will need to use their own account to watch Netflix,” the site says. He says.

stricter rules

Netflix told investors last week that it would implement stricter sharing rules by the end of March. More than 100 million households currently share Netflix passwords, the service said. That “undermines our long-term ability to invest in and improve Netflix,” the company said in a statement accompanying its latest quarterly results.

It’s a big change for a company that six years ago tweeted, “Love is sharing a password.” And Netflix executives know that a backlash is likely.

“This is not going to be a universally popular move, so there will be current members who are not happy with this move. We will see a bit of a cancellation reaction to that,” Greg Peters, Netflix’s recently promoted co-CEO, told investors. a call last week.

The company tested a version of this last year, when it limited password sharing in Latin America and asked members to pay an additional fee for sharing with members outside of the household. The effort had mixed results. Tech publication Rest of the World called the test “a disasterreporting that the new policy was implemented inconsistently. Many users were able to avoid the additional charges, while others were asked to pay more and responded by canceling their accounts, the outlet said.

Netflix predicted a similar response in the US. “Based on our experience in Latin America, we expect some cancellation reaction in each market when we roll out paid sharing,” the company told investors, noting that could hurt its audience. in the short term.

Netflix has said it recognizes the new policy is a major change for customers and has tried to cushion the blow by touting new features aimed at making the transition less painful. That includes allowing members to see all the devices that use an account and making it easy for people to transfer individual profiles to separate accounts. Last fall, the service also introduced a dashboard that allows account users to sign out of individual devices.

“Difficult Conversations”

Netflix has not indicated how much these sub-memberships might cost. However, in tests in Chile, Costa Rica and Peru, sub-memberships increased the monthly cost of an account by a quarter or a third, depending on Variety. US analysts who follow the company expect an additional fee per member of around $3 to $4 per month, according to Netflix’s most recent earnings call with investors.

“This is where these tough conversations come in: who is worth paying an extra quarter of their subscription cost each month?” Saril joked.

If Netflix discovers that too many locations are using the same account, it will implement a tech warning: a prompt that asks users to “verify” some devices via authentication codes.

“When a device outside of your home logs into an account or is used persistently, we may ask you to verify that device before it can be used to watch Netflix,” a Company FAQ notes

Speaking to investors last week, co-CEO Peters described this as a way to “give them a little push and build features that make the transition to your own account easy and simple.”

The company’s hope is to drastically increase its paid audience. Although Netflix is ​​the leader among streaming services in terms of subscribers, it only controls 8% of TV time in the US, executives said on the investor call.

However, it’s a fine line between pushing users to pay more and not driving away too many casual viewers.
Netflix also says that users will not be automatically charged if the system detects too many location streams, nor will accounts be terminated. That led some observers to question how effective the password crackdown will really be.

“All signs indicate that Netflix’s most aggressive intent going into the first iteration of the payshare launch is to continue to pressure violators with reminders and email notifications,” Todd Spangler wrote in Variety in November.