Netflix Plans to End Password Sharing in 2023

As part of its 2023 plans, the streaming platform has announced that it will end its password-sharing feature coming some time after New Years. The streaming giant which saw a mega boom during Covid, has now endured a shaky year with a huge subscriber exodus during 2022 with fewer people at home. The company has been contemplating different initiatives to try to boost subscriber counts.

One of the strategies discussed was ending the password-sharing feature, which according to The Wall Street Journal, may very well be upon us in the near future. The streaming platform plans to set up systems to prevent subscribers from sharing their passwords with devices outside of their homes unless they pay more to do so. The plan already began its initial test markets in Latin American countries, the company said in October. The test run on the streamer’s Latin American countries version involved validation codes on login pages and the option to add a second user. This option is planned to encourage password-sharers to create sub-accounts (“Extra Members”) and pay for people outside their households.

It still remains unclear how the plan is going to work in the US and other parts of the world, or how much the streamer intends to charge for shared accounts. With the password-sharing feature no longer being available at no cost, all users will either have to pay more or get their own subscription plan, with the most affordable option starting at $6.99/month (with ads). This isn’t the only trick that Netflix has tried to boost its subscriber numbers, as this past November, the streamer launched a lower-cost ad-supported subscription tier. However, a recent report does hint that the option is not the most favored on the platform.

Whether this plan or other plans the streamer has will work long-term remains to be seen. Netflix has to tread a fine line with its new policies, to not alienate a further number of its subscriber base, but still give a number of brilliant shows. According to Variety Netflix has estimated that passwords are being shared in violation of its rules with more than 100 million non-paying households worldwide. Clearly, it won’t be able to convert all of that activity into revenue. “Wall Street firm Cowen has estimated that Netflix’s paid-sharing program could add nearly 15 million paid sharers and 1 million new members in the U.S. and Canada in 2023, representing some $721 million in incremental revenue in the UCAN region annually (5.1% over previous analyst estimates).”

Netflix hasn't disclosed what the extra member sub-account would cost yet in the U.S. or other new markets. Variety also mentioned that in Chile, Costa Rica and Peru, that fee has been 23%-29% of the Netflix Standard two-stream plan, which suggests that in the U.S. the cost of sub-accounts could be $3.50-$4.50 each. In the three test markets, Netflix notified members who appeared to be sharing their account outside of their household (detected based on data such as IP addresses, device IDs and account activity from devices signed into the Netflix account) about the new payment options. Netflix also has also started to prompt users to verify their credentials by sending a verification code to the primary account-holder.

If customers still don’t pay for sharing passwords outside of their households, Netflix will keep messaging violators with email reminders and notifications as part of the first rollout. Currently, the Netflix help page on password sharing says, “Netflix will not automatically charge you if you share your account with someone who doesn’t live with you.” This may not change in the future; if the company were to automatically charge new fees for account sharing this could potentially not only anger customers but attract regulators over possible anti-consumer billing practices. Netflix has already rolled out additional features designed to encourage password-sharers to do the right thing and pay for legit account access. This fall, it added the ability for subscribers to convert user profiles into separate new accounts and a dashboard to let users log out individual devices remotely.