Netflix to end password sharing soon

The end of password sharing is coming to Netflix soon—and it will be a challenge for both viewers and the streaming giant.

As reported by The Wall Street Journal, Netflix password sharing service is going to end very soon. The company has been  postponing this action for a long time. As per the sources, researchers at Netflix Inc. identified password sharing as a significant issue reducing subscribers in 2019, but the business was unsure of how to solve it without offending customers. Then Covid lockdowns occurred, resulting in a surge of new users, and the initiative to carefully monitor sharing fizzled.

The practice was not generally penalized by Netflix until last year, as subscriber losses grew. At a company gathering outside Los Angeles early this year, co-Chief Executive Reed Hastings told senior executives that the pandemic boom had masked the extent of the password-sharing issue, and that they had waited too long to deal with it, as per the people who attended the meeting.

More than 100 million Netflix viewers now watch the service using passwords they borrow—often from family members or friends, the company says. Netflix has said that it will put an end to that arrangement starting in 2023, asking people who share accounts to pay to do so. The company expects to begin rolling out the change in the U.S. early in the year.

Netflix’s crackdown risks squandering years of goodwill the company has built up over the years and angering consumers, who have a crowd of other streaming services to choose from.

“Make no mistake, I don’t think consumers are going to love it right out of the gate," Netflix Co-CEO Ted Sarandos told investors in early December, adding it was up to the company to make sure users see value in paying for the service.

Netflix’s terms of service have long said that the person who pays for the account should keep control of the devices that use it and not share passwords, but the company never enforced the rule strictly. Drawing a hard line on who should be allowed to share passwords has proved tricky.

Netflix has updated its customer help pages this year to say accounts are only to be shared by people who live together. The company has said it would enforce its rules based on IP addresses, device IDs and account activity.

To mitigate consumer backlash, Netflix has discussed dialing up the pressure on password sharing gradually, according to people familiar with the situation. Some product executives warned against making the service too complex and not consumer friendly, a practice a few of them referred to internally as Comcastification, a dig at the cable giant, according to people familiar with the situation. Netflix has always billed itself as the alternative to cable providers that tethered viewers to cable boxes and contracts.