How will Netflix end password sharing? Updates for 3 other countries provide insight

(NEXSTAR) – Netflix has already signaled it’s ready to roll out some new password-sharing rules in the U.S. Changes rolled out in three other countries show what American users can soon expect.

In a letter to shareholders last month, Netflix said it expects to roll out paid account sharing “more widely” by the end of the first quarter of 2023. The streaming giant estimates that more than 100 million households share accounts, which “undermines our long-term ability to invest in and improve Netflix.”

Executives explained in the letter that they expect some users to cancel their accounts when paid sharing launches, but that “borrower households”[ads1]; will start their own accounts. How the paid password sharing will be enforced, and how much it will cost, was not released.

Netflix has been exploring ways to crack down on password sharing, including a login verification process in 2021 and the use of sub-accounts for people who live outside the account owner’s home in 2022.

The latter was tested in Chile, Costa Rica and Peru. Netflix appears to have rolled out new rules for account sharing in these countries, and has updated the help pages for all three this week.

According to those pages, anyone in the account holder’s home — referred to as their “primary location” — can use that Netflix account. Those outside the home must use their own account.

Account holders must enter their primary location while logged into Netflix on a TV connected to their home Wi-Fi. Then, all devices connected to the Wi-Fi network at the primary location will be able to access the owner’s Netflix account, while devices trying to access the account from other locations may be blocked. If an account owner doesn’t specify their primary location, Netflix automatically says so using their IP addresses, device IDs, and account activity.

Once a primary location is set, Netflix users are asked to “watch something at least once every 31 days” to keep their devices linked to the location.

To share the Netflix account with someone outside of the primary location, the company says the account owner can add an additional member to their account for a small fee.

Netflix users in these three countries may also be blocked from streaming on some devices if they try to access the platform while traveling or after moving. If so, Netflix says users should either stream something before leaving their primary location to create a “trusted device,” or request a temporary code to verify their device “and continue watching Netflix for 7 consecutive days.”

It’s not clear how accounts with plans that allow multiple screens will be affected by these changes. It’s also not clear if Netflix plans to bring the same system to the U.S. — Netflix did not immediately respond to Nexstar’s request for comment.

Netflix’s move to tackle password sharing is a shift from the company’s previous stance. Then-CEO Reed Hastings (he stepped down as CEO last month) said in 2016 that Netflix would not charge users to share their passwords. Instead, he called password sharing “something you have to learn to live with,” CNBC reports.

Hastings had also never been a fan of ads, calling them a distraction from the entertainment the service provides. But in November, Netflix launched a fourth plan, “Basic with Ads,” which includes an “average of 4 to 5 minutes of ads per hour.” Users on this plan also do not have access to Netflix’s complete library.