The Netflix password sharing crackdown could have a big impact in the US, data shows

There’s apparently a significant amount of Netflix password sharing that’s happening in the streaming giant’s…

There’s apparently a significant amount of Netflix password sharing that’s happening in the streaming giant’s home market. That’s according to new data out from Leichtman Research Group, which found that around one-third of Netflix subscribers in the US share their login credentials with someone else. Some important numbers are needed, though, to put that 30 percent password-sharing estimate into context.

Netflix, at this point, has penetrated almost 70 percent of broadband homes in the US. Across the US and Canada, the streamer boasts around 74 million subscribers. However, subscriber growth is starting to level off, which isn’t great news for the $18 billion annual budget that funds the streamer’s original content. One possible solution? The streamer could always go after freeloaders, for a start.

If you’re one of them, we’re still a long way from you needing to worry. Even though tons of people are already doing that anyway.

Does Netflix allow password-sharing?

Before we get into that, however, let’s note a couple of important points. Netflix has tiered pricing plans that allow for either two or four simultaneous Netflix streams, depending on which plan you pay for. That implies the allowance of password-sharing among at least some Netflix users.

However, Netflix’s terms of service are also explicit. “The Netflix service and any content accessed through our service are for your personal and non-commercial use only,” the terms state, “and may not be shared with individuals beyond your household.”

In an announcement on Wednesday, March 16, Netflix announced that it’s going to start prompting some password-sharers who don’t live in the physical household of the main account holder to start paying up. The practice, among other things, impacts “our ability to invest in great new TV and films” for subscribers. That’s according to Netflix director of product innovation Chengyi Long in a company news release.

A TV screen is shown displaying Netflix, with a bowl of popcorn in the foreground. Image source: JorgeEduardo/Adobe

“Be careful Netflix … you aren’t essential”

Even though this Netflix password-sharing crackdown is only starting in three Latin American countries for now (Chile, Peru, and Costa Rica), that hasn’t stopped US subscribers from expressing outrage. The thinking being that this is but the first step toward a more comprehensive targeting of freeloaders closer to home.

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“Be careful @netflix,” one Twitter user warned. “Increased monthly rates followed by a crackdown on password sharing? Like you, but you aren’t essential. Listen to some real people instead of the echo chamber of your boardroom.”

As that example shows, the tricky thing here for Netflix is that customers don’t look at announcements like these in a vacuum. Meaning, people will start to consider this alongside a favorite show getting canceled. Also alongside the reality of prices going up, and the ongoing calculus of perceived value. Alex Parrella, a 33-year-old subscriber in Massachusetts, told Time magazine that last part is exactly what he’s starting to wonder about.

“If (prices) keep creeping up, I’m not sure it’s going to be worth it for me,” he said.

What’s coming

As part of the aforementioned password-related news, these are the two new features Netflix says it’s launching. And, again, these features are launching only in a few specific countries. Not, for now, in the US.

  • Add an Extra Member: Subscribers on Netflix’s Standard and Premium plans will be able to add sub accounts for up to two people they don’t live with. Each of those accounts can have their own profile. Plus their own personalized recommendations, login and password. And, Netflix’s announcement continues, “at a lower price: 2,380 CLP in Chile, 2.99 USD in Costa Rica, and 7.9 PEN in Peru.”
  • Transfer Profile to a New Account: Again, per Netflix, subscribers on the streaming platform’s Basic, Standard, and Premium plans can enable people who share their account to transfer profile information either to a new account. Or to an Extra Member sub account. Doing so can also keep the account’s viewing history, My List, and personalized recommendations.
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More Netflix coverage: For more Netflix news, check out our coverage of the latest new Netflix movies and series to watch.