How Netflix's Password Crackdown Will Stop Moochers

After a big loss in subscribers (and revenue) in Q1 2022, Netflix announced it was cracking down on password sharing.Rafael Henrique/SOPA Images/LightRocket via Getty Images

Well, it's here.Netflixis finally taking back its accounts and cracking down on password sharing. If you're still mooching off your best friend's mom's account but need to keep up with the latest season of "Love is Blind" or mediocre stand-up comedy specials, then you better prepare to budget for your own subscription next year.

In the words of youngQueen Elizabethin the Netflix series "The Crown," "I'm strong. I can cope with the truth. I just demand to know the truth." The truth is that Netflix password–sharing is gone for good.

Though Netflix'sQ1 shareholder letterstated the streaming platform has 222 million households that pay for the service, the company estimated that accounts were being shared with an additional 100 million households globally — and it's affecting the bottom line. In theQ3 shareholder letterNetflix said it would begin a "thoughtful approach to monetize account sharing" in "early 2023."

Why Is Netflix Doing Away With Password Sharing Now?

Forcing freeloading Netflix viewers to pay for their own accounts is mainly in response to the company's slowing growth in 2022 when the streaming platform lost a shocking640,000 subscribersin the U.S. and Canada alone between January and March of 2022 — a first for the company. (The company netted 200,000 losses worldwide because of an increase in subscribers in the Asia/Pacific region.) It lost a further970,000 subscribersworldwide during the second quarter of 2022, though it added2.4 million more subscribersin the third quarter.

The Q1 shareholder letter blamed the loss on competition from other major streaming platforms likeHulu, Amazon, andYouTube、政治and economic factors likeinflation, Russia's invasion of Ukraine, as well as the sheer number of shared accounts.

Many of these factors, like inflation and geopolitical conflicts, are (obviously) outside of the company's control. But the one thing theycancontrol is who has access to paid accounts. That's why Netflix is drawing a hard line in the sand. If you don't live in the house that pays for the account, you've got to pay up.

How Does Netflix Know If I'm Sharing Passwords?

According to its Terms of Use, the company poo-poos password sharing with anyone outside your "Netflix householdNetflix。”在其网站上说,它使用IP地址es, device IDs, and account activity to determine if your device is within a subscriber household or not.

If Netflix notices you're using a device not in the registered household, you may have to verify your device before you're let onto the platform. Netflix will send a link to the email or phone number on the account with a 4-digit code. The code must be entered within 15 minutes to verify the device.

If your friend's mom has her phone glued to her hand, this method may work for a while. But if you want to keep watching your shows anytime, anywhere, be prepared to create your own account next year. Either way, Netflix is changing the standards of streaming service password sharing, andexperts sayit may not be long before other streaming services follow suit.

Netflix's New Pricing Strategy

If you're worried you'll never again be able to binge the latest season of your favorite shows, the company has a few solutions. Consider signing up for Netflix's new "Basic With Ads" plans for $6.99, which will be available in the U.S. starting Nov. 3, 2022.

Current ad-free subscriptions for Netflix are $9.99, so you'll save a few bucks (at the cost of about five minutes of ads per hour), according to the shareholder letter. Netflix is trying to make this transition as disruption-free as possible — other than the apparent interference to your wallet — and says you will be able to transfer your viewing history and preferences to your new account with theirTransfer Profiletool released in October.

Another option is asking the current account holder (dad, grandma, your best friend's boyfriend's mom) to add a cheaper "sub-account" or new member account to their plan. Maybe you pay them the difference for their kindness. Netflix isn't clear about how much a sub-account will cost subscribers, but in a哥斯达黎加trial program, sub-accounts cost $2.99, one-third of Netflix's basic plan.

Now That's Interesting

Earlier in 2022, Netflixattempted to charge consumersin some Latin American countries for password sharing. If it detected someone using the service for an extended period outside their household, the account holder would be asked if they wanted to purchase an additional home account. Consumer outcry led to Netflix discontinuing this program after just six months. But rejoicing is short-lived — Netflix will roll out its global crackdown on password sharing in 2023.