Netflix Wants You To Pay For Sharing Your Password With Others
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A challenge for both viewers and the streaming giant. Netflix as a leader in the video streaming industry, with 223 million subscribers worldwide and a market capitalization of approximately $128 billion, Netflix is the industry's first to tackle password sharing, but it likely won't be the last.
Two perspectives
Netflix is one of the biggest streaming platforms. Netflix gained popularity thanks to the attractive offer of movies and series, as well as the possibility of sharing an account with others. More than 100 million Netflix viewers now watch the service using passwords they borrow - often from family members or friends, the company says.
From the customer's point of view, this option is used because several people can subscribe to one subscription.
From the point of view of the platform, this is not a good solution. Password sharing was the top issue eating up subscriptions in 2019, but the company was concerned about how to solve the problem.
The effort has waned as a cause for concern as the pandemic accelerated the company's growth in 2020. While cinema, arena and restaurant closures left users seeking entertainment at home, Netflix added nearly 16 million new subscribers in the first quarter of this year alone.
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No more password sharing on Netflix coming soon
Netflix said it would end this deal starting in 2023, asking those who share accounts to pay for it. The company expects to begin rolling out the changes in the United States early this year.
It's a radical change for a company that once tweeted, "Love is sharing a password."
Netflix's crackdown could waste years of goodwill the company has built up over the years and anger consumers who have plenty of other streaming services to choose from.
Netflix's terms of service have long said that the person paying for the account should keep control of the devices using it and not share passwords, but the company has never enforced this rule strictly. Drawing a hard line on who should be able to share passwords has proven difficult.
Instead of blocking password borrowers from accessing someone else's account, Netflix asks them to enter a verification code for their device. The code is sent to the primary account holder and must be entered within 15 minutes.
Netflix updated its customer help pages this year to add that accounts can only be shared with people who live together. The company said it would enforce its policies based on IP addresses, device IDs, and account activity. To assuage consumer backlash, Netflix discussed gradually increasing the pressure to share passwords.
Netflix has considered allowing users to rent pay-per-view content through their subscriptions, as Amazon Prime Video customers can, as it may make users wary of sharing their login information with others who may be billed, people familiar with have said with internal discussions.
The test
While Netflix has not announced its plans for the US, it has been testing in Latin American countries, one of the regions where password sharing is most prevalent. In these tests, Netflix allows subscribers to pay to share accounts with up to two people outside their home.
Netflix has received complaints from consumers about efforts in Latin America, but according to some people, many users choose to pay to share.
The main challenges
One of the main challenges is that Netflix has difficulty determining when an account holder is traveling and accessing the service from somewhere else, such as a second home or hotel, and when another person is borrowing their password, said people familiar with the internal discussions.
Not only Netflix
Other streaming rivals are taking a hit as well, and over time the pressure to make money and continue to grow may prompt services like Disney+, HBO Max and Paramount+ to take a close look at password sharing as well.
Netflix share price
As a result of inflation, many people decided to unsubscribe, which contributed to the decline in the price quotes on the stock exchange. From April to the first half of October, trade was in the range of 166-249. From the second half of October, the situation seems to be improving and the price has increased. The last quarter of the year turns out to be positive, and at the time of writing the Netflix share price is 298.20.
Source: wsj.com, finance.yahoo.com
