Netflix begins crackdown on password sharing in US

Netflix’s crackdown on password sharing is now starting to roll out to US subscribers and other markets, after a delayed launch. The streamer originally planned to introduce “paid sharing” for US subscribers in the first quarter of this year, but pushed back the launch date to the summer, after seeing cancellations in markets where it had already implemented the changes. Under the new rules, US subscribers will have to kick people off their Netflix accounts or pay $7.99/month for an additional membership for those outside their main household.

The company offers tools to make this transition easier, including a way for current subscribers to see which devices are logged into their account and remove devices that shouldn’t have access, as well as tools to reset their passwords.

Those who share someone else’s Netflix account can make the switch to their own account via the “Transfer Profile” option that allows them to move their existing account information, including their watch history and watch list.

The feature was met with a lot of backlash from consumers, but Netflix assured investors that despite some early cancellations, it believes the crackdown on passwords will be beneficial to long-term growth as a company and financial health.

For example, Greg Peters, co-CEO of Netflix, said during its first quarter results that the results of the password crackdown in the first supported markets were very similar to how subscribers reacted to price increases.

Netflix had first started testing the feature in Latin American markets before expanding access to Canada, New Zealand, Portugal and Spain earlier this year.

“We’re seeing an initial cancellation response and then we’re building on that, both in terms of membership and revenue, as borrowers sign up for their own Netflix accounts and existing members buy those additional membership facility for people they want to share with,” Peters told investors during the earning round in April. “So first of all it was strong validation to see consistent results in these new countries because there are several market characteristics that are different from each other and also different from the original Latin American rollout countries,” he added.

The company reported a net increase of 1.75 million global subscribers in the quarter, which fell short of Wall Street estimates of 3 million, reaching a total of 232.5 million accounts worldwide.

It also shared during earnings that it planned to roll out the password sharing changes to US subscribers on or before June 30.

Today, Netflix announced on its blog that it is sending an email to members in the US who share their Netflix account.

“A Netflix account is for use by one household,” the company warns. “Anyone living in that household can use Netflix wherever they are — at home, on the road, on vacation — and take advantage of new features like Transfer Profile and Manage Access and Devices,” the post reads.

The email itself, titled “An Update on Sharing,” simply describes the options available and directs members to further documentation if needed.

Image Credits: Netflix

In an email sent to the press, Netflix clarifies that the email is being sent because it “is now starting to roll out sharing updates to countries around the world, including the US.”

While previous tests indicated that Netflix could recover from a password crackdown, it has yet to see the results of this in its largest and most important market, the US, where it faces increased competition for users’ time and money.

The timing of the launch announcement is remarkable as HBO Max today transforms into Max, a new service that combines HBO and Discovery+ content under one roof. Next month, on June 27, Paramount+ will also add Showtime to its service.

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