On February 8, Netflix converted password sharing into a paid service for subscribers in Canada, New Zealand, Spain and Portugal. Subscribers with Standard or Premium Netflix plans can add up to two out-of-household users at a fee. Those users have their own User-IDs, passwords, profiles and recommendations. Basic and Ad-supported Netflix users have no option to add users to those accounts.
“Our goal is over this year to … convert many of those folks to be paid accounts or to have the account owner pay for them,” said Netflix COO Gregory Peters on January 19, during Netflix’ Q4 2022 earnings call. He was referring to the “folks that are watching Netflix who … (are) borrowing somebody else’s credentials.”
Versions of these new rules will roll out in the US and elsewhere during March.
Positioned as a way to give Netflix subscribers ‘greater control over who can access their account,’ users can now:
- Set their primary location
- Manage account access and devices
- Transfer profiles into new accounts, retaining their settings
- Watch while traveling
- Buy extra members, at prices that differ by country
Netflix says that they will ‘refine’ these features over time.
An Update on Sharing, by Chengyi Long, Director, Product Innovation, Netflix. February 8, 2023
Why it matters
The new pricing is a defensive move to protect revenue in the face of competitive pressures and eroding market share. In 2022, Netflix saw its first decline in membership. “We’ll see a bit of a cancel reaction to that,” said Netflix COO Peters. A wealth of independent research says that cost also drives piracy.
In 2017, Netflix was the 800-pound gorilla in the streaming living room, with the goal of building its membership as quickly as possible, both to edge out competition and to satisfy investors. The new policy is a far cry from its viral marketing tactics at that time.
Despite Netflix’ pricing move, the company does have the market power to set expectations for the boundaries of a user account, and how strongly the account’s parameters are enforced. Other video providers will use Netflix parameters as a measuring stick and as a way to differentiate themselves from Netflix. Their technology suppliers will need to ensure that they can enable these parameters for their service provider customers.