Netflix wants to make it hard on your friends & family by charging for password sharing

Everyone that has a Netflix account is also very familiar with password sharing. I personally have Netflix and my password is shared with at least three friends and one family member. Sometimes you swap passwords for others. Maybe you need my Netflix but I need your Paramount+. It’s a perfectly symbiotic relationship but now it might cost you because the platform wants to start charging a small fee for account holders that want to add up to two users outside of the home.

Per The Hollywood Reporter, this feature is being tested in Chile, Costa Rica, and Peru. It’s not yet clear if this will be rolled out globally but Netflix is toying with this idea because they see it as a way to boost revenue after subscriber growth has stalled in recent quarters. According to Wedbush Securities analyst Michael Pachter, he suspects “that a crackdown will result in 5 percent subscriber growth, partially or fully offset by an increase in churn, and it won’t impact financials that much, if at all. I think they are doing this now because growth has stalled to a crawl.”

Netflix has dabbled in cracking down on password sharing before. Back in March of last year, the platform said it would occasionally prompt users to verify their login credentials to continue using their accounts, making it difficult for your friends and family to use your account outside of your home. The feature was given a limited rollout but it never became permanent. Apparently, there are some flaws in this system. Pachter noted that the inherent challenge in cracking down on password sharing is that it is “hard to differentiate” a user purchasing a new TV from a friend borrowing your account at their place.

All of the major streamers make it clear in their terms of use that accounts are meant to be used within the household but they’re not majorly enforced. Some of the streamers try to curb this by limiting the number of simultaneous streams. For instance, AppleTV+ allows you to have five profiles on your account with six simultaneous streams. You can actually check out a visual snapchat of how each streaming service tackles this scenario below courtesy of The Hollywood Reporter.

Wall Street observers believe that Netflix adding an account-sharing fee won’t make most paid subscribers unsubscribe from the service. Enders Analysis’ Tom Harrington says, “Of, say, the 15 to 20 percent of users that are getting the service for free, some will subscribe or bolt on to the account they are currently leeching off. Few of the paying subs will unsubscribe, with their immediate value remaining the same. A clampdown will be a net positive for Netflix.”

Pay hikes don’t seem to result in much of a loss for Netflix so that MIGHT be on to something here. The service has gradually raised its prices on a few occasions and it’s not like they have been impacted all that much by it. Will the account-sharing fee take and result in more revenue for the streamer? Only time will tell but it does represent another interesting moment in the ever-growing world of streaming services.

Do YOU think Netflix will make the account-sharing fee permanent worldwide? Will it help boost revenue?