This week, Netflix took its users by surprise by stating that they are finally set to address the widespread occurrence of password sharing. On Tuesday, April 19, the streaming leader said that over a 100 million households were using a shared password, including 30 million from the US and Canada. This comes across as one of the issues the OTT platform plans to tackle following the loss of 200,000 subscribers in the last quarter.
Reportedly, the video streamer’s plan does not entail any sort of freezing of the shared accounts. Rather, the platform would most probably call for fixing an additional free for these accounts. They are essentially targeting accounts that are being used by several people outside of the primary user’s household. Netflix plans to kickstart its scheme by sending an alert to account holders who have enabled the use of their password outside their homes. This would be the platform’s first step to finally generate all the revenue it lost in the previous quarter.
Previously, the streaming company initiated a test of this in certain areas like Chile, Costa Rica and Peru. In the test, Netflix charged an additional fee for accounts sharing a password across addresses. The fee was for them to add “sub accounts” for a maximum of two people outside of their households. The rates were different in each of the test locations. It was $2.99 in Costa Rica, $2.92 in Chile, and $2.13 in Peru. Moreover, the streaming leader also enabled people using a shared password to transfer their personalised profile information. This would be either to a new account or a sub account, making sure the viewing history and recommendations are intact.
“We’re not trying to shut down that sharing, but we’re going to ask you to pay a bit more to be able to share with her and so that she (user) gets the benefit and the value of the service, but we also get the revenue associated with that viewing,” said Greg Peters, Netflix’s COO.
Netflix did not define as to how much revenue it expects to produce from this new strategy. Moreover, a survey stated how 80% of Americans using someone else’s password would not prefer getting their own account in case they cannot share the password.
Netflix comes across as the first streaming service to attempt to crack down on password sharing. Other services like Disney, Amazon, etc would not likely set such a strategy without seeing how Netflix performs. We are yet to see how Netflix would deal with problems bound to arise such as wrongly tagging people as outsiders or how it will remove outsiders if the primary holder refuses to pay the additional fee.