Netflix’s Password Sharing Crackdown Drives 9.33 Million New Subscribers

In a move likely very frustrating for subscribers, Netflix is cracking down on password sharing, specifically sharing passwords with those not living under one roof. This isn’t the streaming company’s first attempt to curb password sharing on the Netflix platform. But this time, it sounds like the streaming platform means business. In Q1 of 2022, Netflix lost 200,000 subscribers. It was the first subscriber loss for the streaming platform in a decade.

If there was ever any doubt that Netflix would follow through with its plans to cut down on inter-household password sharing, that is over. But how will Netflix stop password sharing? This time, the streaming platform is getting money involved. Netflix isn’t going to boot the infringing profiles off the main account right away if it catches someone password sharing. Instead, it’ll just make the account holder pay up. As of May 23, Netflix’s password-sharing crackdown has officially arrived in the US. And, likely to the dismay of consumers, it’s seeing some success.

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Netflix’s Password-Sharing Crackdown Is Successful

According to Deadline, Netflix’s Co-CEO Greg Peters recently said, “Our paid sharing work, and our ads work, creates a more effective engine to translate all [Netflix] value into revenue growth, and will support increased conversion of our addressable market in many years to come.” And the company recently noted, “We believe we’ve successfully addressed account sharing, ensuring that when people enjoy Netflix they pay for the service too. Features like Transfer Profile and Extra Member were much requested, and many millions of our members are now taking advantage of them.” This success was recently quantified as Netflix added 9.33 million paid subscribers in Q1 of 2024. In total, Netflix now has 269.60 million paid subscribers as of March 31.

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Deadline revealed, “Greg Peters says internal viewership data from before and after the implementation of paid password sharing shows the new policy has not turned off viewers, as some had initially predicted it would.” Peters noted that “owner households” viewing habits remained steady, though he admitted that Netflix’s password-sharing crackdown did cause a loss in some viewership numbers.

Peters noted, “We’re essentially cutting off some viewers who were not payers and therefore we’re going to lose some viewing associated with that,” he explained. Still, “despite that impact and despite the general pressure from strong competition,” he continued, “we think our engagement remains healthy.”

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Netflix previously shared in a shareholder letter:

The cancel reaction [to the password sharing crackdown] was low and while we’re still in the early stages of monetization, we’re seeing healthy conversion of borrower households into full paying Netflix memberships as well as the uptake of our extra member feature. We are revenue and paid membership positive vs. prior to the launch of paid sharing across every region in our latest launch.

Jump to: Netflix Password Sharing Crackdown Is Successful // Netflix’s Paid Password Sharing Crackdown Has Arrived in the US // Netflix’s New Account Sharing Rules // Netflix Profile Transfers // Device Log Out // Netflix Password Sharing Is Widespread // Consumer Reaction

Netflix’s Paid Password Sharing Crackdown Has Arrived in the US

Netflix's Password Sharing Crackdown Has Officially Arrived in the US_1

Netflix recently expanded more serious efforts at ending password sharing to Canada, New Zealand, Portugal, and Spain. And now, the password-sharing crackdown has arrived in the United States. In a blog post shared on May 23, Netflix noted:

Starting today, we will be sending this email to members who are sharing Netflix outside their household in the United States. 

A Netflix account is for use by one household. Everyone living in that household can use Netflix wherever they are — at home, on the go, on holiday — and take advantage of new features like Transfer Profile and Manage Access and Devices.

Among other things, Netflix plans to begin blocking devices that it feels are using a Netflix account but not paying for it. The blog post further notes, “If you want to share Netflix with someone outside your household, you can use these features.

Transfer a profile. Anyone on your account can transfer a profile to a new membership they pay for.

Buy an extra member. You can share your Netflix account with somone who doesn’t live with you for $7.99/month more.

Another blog post from Netflix Canada notes more about you can “share Netflix” without breaking its rules under its paid password-sharing plan:

Set primary location: We’ll help members set this up, ensuring that anyone who lives in their household can use their Netflix account. 

Manage account access and devices: Members can now easily manage who has access to their account from our new Manage Access and Devices page. 

Transfer profile: People using an account can now easily transfer a profile to a new account, which they pay for — keeping their personalized recommendations, viewing history, My List, saved games and more. 

Watch while you travel: Members can still easily watch Netflix on their personal devices or log into a new TV, like at a hotel or holiday rental. 

Buy an extra member: Members on our Standard or Premium plan in many countries (including Canada, New Zealand, Portugal and Spain) can add an extra member sub account for up to two people they don’t live with — each with a profile, personalized recommendations, login and password — for an extra CAD$7.99 a month per person in Canada, NZD$7.99 in New Zealand, Euro 3.99 in Portugal, and Euro 5.99 in Spain. 

All of these aspects of password sharing have been a part of Netflix’s tests up till now. But, of course, the price point continues to evolve. Below we detail more about each one of them.

Netflix’s New Rules and Restrictions for Password and Account Sharing

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Netflix recently revealed a new Help Center page that’s all about “Sharing Your Netflix Account.” On this page, Netflix makes it clear that password sharing and Netflix accounts are “for people who live together in a single household.” The exact definition of a Netflix Household is “people who live in the same location with the account owner.” According to Netflix, “people who are not in your household will need to sign up for their own account to watch Netflix.”

Based on the other information on the Help Center page, it also feels like a Netflix Household is defined by the use of one WiFi connection. Netflix notes it determines devices in a household “us[ing] information such as IP addresses, device IDs, and account activity from devices signed into the Netflix account.”

Extra Members

Netflix now notes, “People who are not in your household will need to sign up for their own account to watch; or in many countries you can buy an  extra member slot to add an extra member to your account.” The platform adds, “An extra member will have their own profile, account, and password, but their membership will be paid for by the person who invited them to join.”

Extra members differ from regular account holders in these ways:

Extra members can watch Netflix on any device, but only on 1 device at a time.

Extra members can also download titles, but only on 1 phone or tablet at a time.

Extra members can only have 1 profile and cannot create additional profiles.

This profile can be a new profile or an eligible profile transferred from the account owner who invited the extra member.

This profile can have different maturity ratings, but cannot be a Kids profile.

Extra members must activate their account in the same country associated with the account owner’s.

Example: If the account owner signed up in Costa Rica, the extra member must create and activate the extra member account in Costa Rica.

Verified Netflix Devices

The new page about account and password sharing also introduces the idea of Netflix “verified devices.” Netflix notes that if a device not associated with your household tries to sign into your account, then it may need to be verified. Verification involves the main account user approving a device account use within the space of fifteen minutes. And Netflix may ask for new device verification periodically, ostensibly to prevent verification of devices out of the household.

If you are the primary account holder, or if you are using the primary internet connection in the primary account user’s household, you shouldn’t need to worry about verifying your device, according to Netflix. Regardless of your location, if you are the primary holder of your account, you should be able to use it anywhere. Of course, how Netflix can know who exactly is holding the device or belongs to a device household at any time seems murky.

Interestingly, this new page doesn’t reference the kind of paid account sharing that has seemed top of mind for Netflix.

Netflix Profile Transfers

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To ready users for the upcoming crackdown, Netflix has added the option of an easy profile transfer. Very simply, this lets each profile on an account easily become its own account. As Netflix shares in a release:

We’re launching Profile Transfer, a feature that lets people using your account transfer a profile — keeping the personalized recommendations, viewing history, My List, saved games, and other settings — when they start their own membership.  

Netflix also notes, “To transfer a profile, go to the “Transfer Profile” option when you hover over your profile icon in the dropdown menu on the homepage — then simply follow the instruction.” Ostensibly, this feature is nicely asking for those sharing accounts to create their own with ease… Before there are repercussions.

In addition to transferring your profile to a new account, you can now transfer it into an already existing one. This feature is now widely available.

Netflix Lets You Log Out of Individual Devices

In addition to Profile Transfers, Netflix has rolled out a new feature that lets users log out of individual devices. This feature, called “Managing Access and Devices” is “a new feature in Account Settings that allows you to view all the recent devices that have streamed from your account and to log out of specific devices with just one click.”

Ostensibly, it’s there in case you forget to log out of a device that you were just using in passing. However, this new update also serves as a further measure by Netflix to cut down on password sharing.

Netflix is not messing around when it comes to password and account sharing.

The cast of Knives Out 2 in our first look clip

100 Million Households Are Netflix Password Sharing

This is quite a move from a company that reportedly spent $400 million for the Knives Out sequels. And is dropping something like 86 original movies this year. But according to a company blog post, Netflix claims the password sharing is preventing them from investing in top-tier content.

Chengyi Long, director of product innovation at Netflix, said, “We’ve always made it easy for people who live together to share their Netflix account, with features like separate profiles and multiple streams in our Standard and Premium plans. While these have been hugely popular, they have also created some confusion about when and how Netflix can be shared. As a result, accounts are being shared between households—impacting our ability to invest in great new TV and films for our members.”

Furthermore, the Netflix shareholder letter, indicated more than 100 million households are sharing passwords. More specifically, 30 million households in the US and Canada share passwords. This is a problem for the streaming platform.

Ryan Gosling in the Russo Brothers' The Gray Man coming to Netflix in 2022

How Will Consumers Respond to These Netflix Attempts to Stop Password Sharing?

So this is all to say password sharing on Netflix is responsible for The Baby-Sitters Club‘s premature demise. We can’t imagine that’s specifically true. The announcement comes at a pretty overwhelming moment for streaming platforms in general. Pretty much every major studio with a distribution wing has one. Disney— which snatched its Defenders Saga back from Netflix has three. That company has made serious moves with Disney+ over the next several months. Disney+ has added parental controls and ad-supported pricing in a relatively short space of time. And then there’s Paramount with its two wings. And haven’t even mentioned Prime Video, HBO Max, Apple TV+, and so, so many more.

It’s reaching a point where subscribers are already shelling out a lot monthly to keep up. Password sharing, and trading off, has historically made things a little bit easier. Netflix notes it knows this move might not be initially popular. The company shares, “From our experience in Latin America, we expect some cancel reaction in each market when we roll out paid sharing, which impacts near-term member growth. But as borrower households begin to activate their own standalone accounts and extra member accounts are added, we expect to see improved overall revenue, which is our goal with all plan and pricing changes”

But, however unpopular these changes are in theory, they seem to be doing exactly what the company hopes. So we’d better see some truly incredible content manifest. (And we expect Netflix to be able to pay their creators, writers, and actors what they deserve and more.)

Originally published on March 16, 2022.

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