Netflix reveals how it plans to start cracking down on password sharing

Kristen Walters

The days of sharing your Netflix password for free are coming to an end. Soon, more than 100 million Netflix customers who share their password "outside their household" will have to pay a penalty if they continue to let others use their account.

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Last week when Netflix announced that it had lost subscribers during the first quarter of 2022, its stock price tumbled down more than 35 percent.

While some analysts point to the fact that Netflix simply doesn't have enough "must-stream content" at the moment to keep existing subscribers engaged, the company argues that "password sharing" is in large part responsible for artificially lowering subscriber numbers.

At the current moment, Netflix offers three different paid subscription plans to its customers:

  • Basic (which allows you to stream videos on one device at a time)
  • Standard (allows streams on two screens at once), and
  • Premium (allows subscribers to stream on up to four devices at a time.)

Since streaming is allowed on more than one device if you are on the Standard or Premium Netflix plans, many people simply share their passwords with friends and family members living outside their household to get the benefit of the streaming service without having to pay extra for it.

But this practice is hurting Netflix's bottom line. Not only are they losing out on revenue from would-be subscribers, but their stock price is also suffering because subscriber numbers are down.

If Netflix could deter the estimated 100 million subscribers who share their password with at least one person outside of their household, their subscriber numbers may improve.

Netflix is currently testing adding a $2 to $3 "add-on" charge for subscribers who share their passwords with people outside of their household. So far, these tests have been limited to certain locations like Chile, Peru, and Costa Rica but are expected to start affecting US customers within the next year.

Do you share your Netflix password?

If so, would you pay extra to continue sharing it outside your household?

More importantly, do you think this will solve Netflix's financial troubles, or do you think the real issue is the lack of new, exciting content?

Share your thoughts in the comments.

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