How Will Netflix End Password Sharing? New changes provide insight

(NEXSTAR) – Netflix has already signaled that it is ready to introduce some new rules when it comes to password sharing in the US. Changes introduced in three other countries show what US users can expect soon.

In a letter to shareholders last month, Netflix said it expects to roll out paid account sharing “more broadly” towards the end of the first quarter of 2023. The streaming giant estimates that more than 100 million homes share accounts, which is “our long-term ability to invest in and improve Netflix.”

Executives explained in the letter that they expect some users to terminate their accounts when paid sharing launches, but that “borrower households” will open their own accounts. How paid password sharing will be enforced and how much it will cost has not been made public.

Netflix has been exploring ways to crack down on password sharing, including a login verification process in 2021 and using sub-accounts for people living outside the account holder’s home in 2022.

The latter has been tested in Chile, Costa Rica and Peru. Netflix appears to have rolled out new rules for account sharing in these countries, and updated its help pages for all three this week.

According to these sites, anyone in the account owner’s house — referred to as the “primary location” — can use that Netflix account. People who are not at home must use their own account.

Account holders must set their primary location while signed in to Netflix on a TV connected to their home Wi-Fi. Then all devices connected to the Wi-Fi network in the primary location can access the owner’s Netflix account, while devices trying to access the account from other locations can be blocked. If an account holder doesn’t set their primary location, Netflix will automatically say so based on their IP addresses, device IDs, and account activity.

Once a primary location is set, Netflix users will be encouraged to “watch something at least once every 31 days” to keep their devices connected to the location.

To share the Netflix account with someone outside of the main location, the company says the account holder can add an additional member to their account for a small fee.

Netflix users in these three countries can also be blocked from streaming on some devices if they try to access the platform while traveling or after moving house. In this case, according to Netflix, users should either stream something before leaving their primary location to create a “trusted device” or request a temporary code to verify their device “and continue watching Netflix for 7 consecutive days.”

It’s not clear how these changes will affect accounts on plans that allow multiple screens. It’s also not clear if Netflix plans to bring the same system to the US — Netflix didn’t immediately respond to Nexstar’s request for comment.

Netflix’s move to address password sharing is a departure from the company’s previous stance. Then-CEO Reed Hastings (he resigned as CEO last month) said in 2016 that Netflix would not charge users for sharing their passwords. Instead, he called password sharing “something to live with,” reports CNBC.

Hastings had also never been a fan of advertising, calling them a distraction from the entertainment the service provides. But in November, Netflix launched a fourth plan, “Basic with Ads,” which includes “an average of 4 to 5 minutes of ads per hour.” Users on this plan also don’t have access to Netflix’s full library.