Netflix to Charge Extra for Password Sharing: How It Affects You

Net­flix has final­ly decid­ed to crack down on pass­word shar­ing among users who don’t live in the same house­hold. The stream­ing giant announced it will start charg­ing an extra $8 per month for sub­scribers who want to share their login infor­ma­tion with peo­ple out­side their home in the US.

The new pol­i­cy only affects pass­word shar­ing across house­holds. Users who share an account and live togeth­er, such as fam­i­ly mem­bers in the same house, will not have to pay more. How­ev­er, users who share their login with friends or rel­a­tives in dif­fer­ent homes will have to set up sub-accounts for an addi­tion­al fee. The sub-accounts will let shared users keep their pro­files and watch history.

Net­flix said the pol­i­cy change is aimed at reduc­ing lost rev­enue from pass­word shar­ing, which the com­pa­ny esti­mates reach­es over 100 mil­lion view­ers. Pass­word shar­ing has been a “chal­lenge” for Net­flix, but the pol­i­cy change could also back­fire, as it could hurt the platform’s sub­scriber base, which already dropped in the first quar­ter of 2022. Net­flix lost 200,000 sub­scribers, its biggest cus­tomer loss in more than 10 years.

To ease the pol­i­cy change, Net­flix co-CEO Greg Peters said the com­pa­ny will add new fea­tures to make it eas­i­er for users to switch pro­files or start their own accounts. How­ev­er, Peters admit­ted the pass­word shar­ing crack­down “will not be a uni­ver­sal­ly pop­u­lar move.”

“Any attri­tion in the U.S. would wors­en the decline with­in a region where Net­flix lost about 920,000 sub­scribers last year,” Peters said.

The pass­word shar­ing pol­i­cy change began rolling out glob­al­ly ear­li­er this year, first tar­get­ing sub­scribers in Cana­da, New Zealand, Por­tu­gal and Spain. Net­flix plans to extend to all coun­tries by the end of June 2022. The tim­ing coin­cides with the launch of Netflix’s new ad-sup­port­ed plan, which costs $7 per month.

While the extra sub-account fees are low­er than Netflix’s reg­u­lar plans, the pol­i­cy change adds costs for sub­scribers at a time when many house­holds are fac­ing bud­get con­straints due to infla­tion. Netflix’s stock price fell 2% after the announce­ment but remains up 20% year to date.

The end of pass­word shar­ing marks a crit­i­cal moment for Net­flix as it tries to bal­ance sub­scriber growth with rev­enue. Whether the new pol­i­cy achieves that goal with­out fur­ther hurt­ing its cus­tomer base is yet to be seen. For now, sub­scribers should get ready to pay for any pass­word shar­ing hap­pen­ing out­side their house­holds or cut off those free­load­ers. The days of freely shar­ing your Net­flix pass­word with friends and fam­i­ly are offi­cial­ly over.