Netflix announced in May 2023 that it would no longer turn a blind eye to password sharing among members of multiple households. This kind of sharing has always been against its terms of service — to which users agree — but the company hadn’t enforced the policy.
In that announcement, Netflix reminded users that their accounts are meant to be shared only among members of a single household, and suggested they change their passwords and sign out on devices that shouldn’t have access to their account.
The New Rules
Netflix is now starting to enforce its policy, automatically logging out those whom it believes are not part of the household paying for the membership.
Netflix now requires each household to maintain their own paid membership, or for households to pay an extra $7.99 per month to share their accounts with someone who doesn’t live with them.
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Millions Have Been Booted Off Accounts
Marketing consultant Lise Keeney had been using her younger brother’s Netflix account for so many years that it had become a running joke between them. He even changed the name on her profile on his account to “Parasite.”
“I wasn’t a total freeloader, though,” she says. “I had given him my Hulu and HBO passwords. It was a shared ecosystem, because it’s expensive as a single person to have all those services.”
But when Keeney went to catch up on the last two episodes of “The Ultimatum,” she got an ultimatum of her own: Start ponying up for your own account or say goodbye to Netflix content.
Kinney was one of millions of Netflix watchers to recently get booted off accounts they shared with friends or family members from different households.
How Does Netflix Primary Location Work?
To determine your household, Netflix uses the IP address and device information of the primary location where you use the service. Devices that have connected to it in the past 30 days from that location are considered part of that primary location, even when used elsewhere.
You can set your Netflix household primary location by going to the Netflix help menu on your television and following the directions to confirm or update your household.
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How Will Netflix Know Who’s Sharing Passwords?
If you do not set a household, Netflix will set one for you automatically. Then, if it detects devices logging in to your Netflix account that have not connected to the appropriate IP address, it may determine that they’re not a part of your household and prevent the login.
The company is also likely hoping publicly proclaiming its plans to crack down on password sharing will also prompt users to start enforcing it themselves, says Michael D. Smith, professor of information technology and marketing at Carnegie Mellon University’s Heinz College.
“The fact that Netflix has done this makes it easier for me to have the conversation with my son — who just graduated from college and got a job — that it might be time to get his own Netflix subscription,” Smith says.
Why Won’t Netflix Let Us Share Passwords Anymore?
Before the password crackdown, Netflix said more than 100 million households were sharing accounts.
“They’re just trying to cut down on that and get more subscribers in a way that doesn’t alienate their existing customers,” Smith says.
The tactic appears to be working.
Antenna, a market data platform for the subscription economy, found that Neflix saw more than 70,000 daily signups in the days after it announced the crackdown, a 25% increase over the previous two months.
Kinney wasn’t one of them, however, at least not yet.
“I still have Peacock, Hulu, Discovery Plus, and Apple TV,” she says. “I think I may have to start cycling through them. I’m going to make a list of what I want to see on one platform, watch it and then shuffle over to another. I don’t think I can afford all of them at the same time.”
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Will Other Streaming Companies Follow Suit?
Now that Netflix has cracked down on sharing passwords in a very public way, competitors may see an opening to take similar action to boost revenue, Smith says.
That said, there could be benefits for consumers. Smith likens the approach to studios cracking down on pirating. When they’ve done that successfully, they’ve been able to spend more money investing in content.
“We would expect the same thing from the streaming companies,” he says. “The more money they make from subscribers, the more they’re able to invest in content and the better that is for consumers and Netflix. I think it’s a sign that the business is maturing.”
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Netflix Password Sharing: Here’s What You Need to Know originally appeared on usnews.com
