Netflix is testing a way it can limit password sharing, in what could signal a notable shift of the streaming giant’s posture toward users.
“Is this your account?” an on-screen notification asks some of those trying to log on with credentials from someone outside their household, according to users’ screenshots. “If you don’t live with the owner of this account, you need your own account to keep watching.”
Users can then enter their own information and create an account, which comes with a 30-day free trial in certain territories.
“This test is designed to help ensure that people using Netflix accounts are authorized to do so,” a company spokesperson said in a statement.
A commotion on Twitter over the notifications was first reported on by The Streamable, which indicated that so far only connected-TV subscribers have hit the pay-wall.
The number of accounts able to simultaneously stream is factored into the price of subscriptions. The Basic $9 plan allows only one device to stream, while the Standard plan at $14 doubles that and the Premium level expands it to four devices. Netflix’s terms of service say a subscription is “for your personal and non-commercial use only and may not be shared with individuals beyond your household.”
The potential crackdown has implications beyond just the sharing of passwords. It is considered an account verification test, so it could also be used for security or anti-fraud measures. Netflix is famous for conducting hundreds of A/B tests a year among its more than 200 million global subscribers, for a wide suite of product features and monetization tools.
In 2016, Co-CEO Reed Hastings (then solo CEO) said password sharing is “something you have to learn to live with.” But that was before the company had executed its plan to go fully global. By October of 2019, the issue was significant enough that COO and Chief Product Officer Greg Peters said the company was seeking a “consumer-friendly” solution, but had not developed any specific plans.
In 2020 alone, as the coronavirus created the most captive streaming audience in history, Netflix added some 37 million subscribers. While there has long been a fairly laissez-faire stance on sharing, the stakes are getting higher, especially with many new entrants in the streaming race like Disney+, HBO Max and others.
Research firm Parks Associates, in a report earlier this year, pegged overall losses by streaming services from password sharing at $9.1 billion, projecting that the figure will reach $12.5 billion by 2024.
Magid, another researcher, says about one-third of Netflix users share their passwords. The firm also found that streaming service users under 35 share passwords routinely. As the market has seen the entry of Disney+, HBO Max and a host of others, the need to police passwords is balanced against the importance of seeming like an open and welcoming environment for young viewers.