What Are Netflix’s Password Sharing Rules, and Why Are People Mad?

Every three months, Brandy Andersen fills her Jeep with clothes, kitchen utensils, a box fan and a small TV and moves to a new city. Andersen has been a traveling emergency nurse for the past three years, working in Brooklyn, Boston and DC and is now based in a remote part of Northern California.

But her house, husband and primary Netflix address are all based thousands of miles away in Midland, Ga.

Andersen is one of many longtime Netflix customers upset by the company’s new crackdown on password sharing, which launched in the US this week and would prevent her from streaming on the road. After years of ignoring and even encouraging password sharing, the streaming company is asking anyone who uses a Netflix login for more than 31 days elsewhere to get a separate account or pay $7.99 a month to be added to their main account.

Concerned Netflix users have taken to social media to complain about the new policy, with some even threatening to quit or switch to competitors with more lax sharing requirements, such as Disney Plus and Max.

“I’m not paying eight more dollars, I’m just not,” says Andersen, who plans to cancel his $19.99 per month premium plan. “I pay a lot as it is. I understand that the price has to go up over time – it didn’t bother me at all – but to say that now I can’t use it myself? It’s insane.”

Can Netflix handle the backlash?

Netflix didn’t rush into this plan and is likely responsible some public anger and the loss of some subscribers. The company began testing enforcement in smaller markets last year and rolled it out in Canada this year. A small amount of attrition is expected and likely to be temporary, analysts say.

“In every market there’s an initial outrage,” says Rich Greenfield, media analyst at LightShed Partners. “Then they put out a piece of content people can’t live without, [and] two months later, the number is up.”

Popular quality series and films are all the company should focus on, says Greenfield. “The best way to get people to sign up for their own account or as an additional account is content they literally can’t live without.”

In an April survey, Wedbush Securities asked current and recent Netflix customers what they would do after an attack. About 40 percent said they had no intention of making any changes to their subscription, 30 percent said they would join or create a family or group plan, and 15 percent said they would cancel or leave Netflix.

“It seems like only the squeaky wheels are coming online to voice their grievances. Most are just the piggy backers I guess, unhappy that they have to pay,” said Alicia Reese, an equity analyst at Wedbush.

Not all Netflix customers are upset about the cut. Some were happy for the company to go after “freeloaders,” especially if it means more revenue for their favorite shows, or if it means their own monthly fees stop increasing. Netflix has said that 100 million people worldwide stream with borrowed accounts.

“We subscribers get either higher prices or lower service than would otherwise be the case if the freeloaders were to cough up the subscription fee,” Diane Averill of Pittsburgh said in an email. “And Netflix employees could get better pay if the company was more profitable, so a lot of people are potentially being ripped off by the cheaters.”

Netflix declined to comment on the response from users.

“This is an important transition for us, and so we’re working hard to make sure we do it well and as thoughtfully as we can,” Netflix co-CEO and director Gregory Peters said in the company’s recent earnings call. He said that in countries where it has rolled out the new policy, the company tends to see an initial number of cancellations followed by password borrowers signing up for their own accounts and members paying for extra people.

Netflix said in an April letter to shareholders that in Canada, which it says is a “reliable predictor of the U.S., our paid membership base is now larger than before the launch of paid sharing and revenue growth has accelerated and is now growing faster than in the U.S.”

What’s next for affected streamers?

Some people are in situations where it doesn’t make sense to pay more money. For example, paying subscribers who divide their time between different places, either for work, because they have a holiday home or for family reasons.

But many of the people who received alerts are exactly who Netflix is ​​likely targeting: parents who share with students, grown children who share accounts with their older parents, and groups of friends who share the cost of a few subscriptions.

Years ago, Ammy Woodbury and her friends signed into a premium Netflix account together. She says she understands that the company believes the business model no longer works, but the change pushed the group to cancel.

“I reckon we’ll probably subscribe for a month or two a year to catch up on ‘Stranger Things’ and ‘Wednesday’ and watch some movies. But then we close it again, says Woodbury, 49, who lives in Santa Clara, California. They forced me to actually consider how much I value them, and the answer is definitely less than $10 a month, probably less than $50 a year.”

When the new options first came out in Canada in February, Sarah Taylor reluctantly agreed to pay the extra amount. She shares her account with her retired parents so they can watch “Bridgerton” and British crime procedurals. But when Netflix later said she actually had to upgrade her basic account to qualify to add members, Taylor called the company to quit for good.

A customer support representative told her that she could continue to share her account if she streams for a few minutes from her smartphone, drives 25 minutes to her parents’ house, streams again from her phone on WiFi, and finally logs them back into her account from the TV. She was told to do it every 14 days and only pay the original $9.99 a month. She decided not to cancel.

“They’re crazy,” Taylor says. “A lot of people are going to get rid of Netflix. A lot I personally know have.”

For Courtney Levin, it’s less about the money and more about Netflix breaking an unspoken agreement. Levin also pays into an account she shares with her elderly parents, but she plans to cancel.

“When they first switched from DVDs to streaming, they kind of backhandedly promoted sharing your passwords,” Levin said. “We all have multiple accounts, Prime, Max, Disney. It’s not that we’re not willing to pay for the things we want, it’s that you built your service on the brand that you could share with your family, and now do you change it.”

There is no shortage of options. But for anyone thinking of switching so they can keep sharing, Wedbush’s Reese warns they could follow in Netflix’s footsteps in the future.

“Netflix, they’re going to be the first on this, and I expect to see the other streamers follow over time.”

What exactly are Netflix’s password sharing rules?

While Netflix has been talking about its password plans since last year, the notices that rolled out this week in the US were immediately effective and caught some people off guard. Many were confused about how the company would enforce the plan and were surprised to find it applied to them. Here’s what we know so far:

  • Netflix says an account can only be used by members of one physical household sharing one internet connection. Additional members logging in from other locations can be added for $7.99 a month.
  • The restrictions appear to only apply to TVs and not mobile devices for now. Once you’re signed in to a smartphone or tablet, you should be able to stream on it from anywhere.
  • You can still travel without problems for up to a month. People must connect to the main site once every 31 days to avoid being logged out of their account.
  • If you are moving or plan to be away for more than 31 days, you can change your household’s location.
  • It doesn’t matter what level you pay for or your reasons for being away from the main address. The company has no exceptions for more unusual cases such as deployed members of the military.
  • Netflix mostly uses IP addresses to determine where people log in from, but it also uses device IDs and account activity.
  • It infers which location is your home base, but you can manually set your household location from Netflix on a TV by going to Get Help → Manage Netflix Household.
  • You can only add additional members to the more expensive Standard and Premium plans, and the number of additional members is limited. (One extra on standard, two members on premium.)
  • There are no penalties for sharing, no Netflix police going door to door. People streaming from secondary sites will just be logged out.

And here’s a guide to navigating the expensive landscape of streaming and digital entertainment.

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