Netflix subscribers have long shared their passwords with friends outside their households, and Netflix has been pretty cool with that. In 2016, the company’s CEO Reed Hastings even called it “a positive thing.” But now, it’s testing ways to force people to stop sharing their account details with others. Or rather, it wants you to pay an add-on fee for every person you share with. “At present, I share my account with two other family members, and we live in three different countries,” Netflix password sharer and web marketer Simone Colavecchi told Lifewire via email. “If you asked me, I would think twice before paying the full price to have my own account. On one side, people who got used to watching Netflix would pay the full price, but in my case, they would lose a customer.”
Times Change
It’s pretty common for a group of friends to club together, pay Netflix’s monthly fee, then share the login so they can all watch. It’s the perfect balance of socialism and capitalism. You probably either do it yourself or know somebody who does. And Netflix hasn’t really ever cracked down on the practice. Now, that’s changed. In a trial across Chile, Costa Rica, and Peru, Netflix is experimenting with charging for add-on members if they log into your household plan from another location. Members with standard and premium plans will be able to add sub-accounts for up to two people, says Netflix director of product innovation Chengyi Long in the blog post. The prices in this trial are 2,380 CLP in Chile, $2.99 in Costa Rica, and 7.9 PEN in Peru. That’s around $3 or less for each add-on member. Netflix is also making it as seamless as possible to transfer out to a new account. If you were previously taking up a slot in somebody’s household plan but using your own user profile, you won’t lose it. If you sign up for a brand new account or one of the above-mentioned sub-accounts, then you can take your profile with you.
Get Them Hooked
It looks very much like Netflix was happy to allow password sharing because it drove growth. Not financial growth—because nobody was paying extra—but user growth. And now that people are hooked, it’s time for them to start paying. “One could say that its leniency towards password sharing is one of the things that made Netflix so successful in the first place. It allowed word of the platform to spread through what can be described as a snowball effect,” Jamie Knight, CEO of market and data trends news site DataSource Hub, told Lifewire via email. But why now? Because of that universal obsession of public companies—growth. Netflix added 26 billion subscribers at the beginning of lockdown in 2020, but now it’s failing to meet market analysts’ expectations. That is, growth is slowing, in part because so many people who want Netflix are already using it. But as we’ve seen, many of those users aren’t paying. If Netflix can convert a decent percentage of those password sharers to paying users or at least convince existing account holders to pay for them, then that’s a source of growth right there. And why not? At $3 a pop—if that’s what it ends up costing in the US—it may make sense for people to pay a little extra but still split the main plan. And plenty of parents will surely be happy to pay for their kids to watch Netflix in their college dorms. In the age of internet behemoths like Facebook and Netflix, the old, already-destructive model of growth at all costs doesn’t work. Or rather, it’s even more destructive. Facebook has already reached near saturation with almost the entire planet signed up, and it drives growth by making us all hate each other to sell advertising. Netflix will surely reach another saturation point even if this new policy is successful, but at least it’s playing it smart. Add-on payments and the ability to keep your hard-watched user profile really make it easy to transition. The one thing still left unsaid is how Netflix plans to enforce its new plans.
