Netflix's new password sharing policies alienate customer base

No matter your streaming service of preference, you’ve probably shared your password or been on the receiving end of such a transaction at some point in your life.

As students, streaming services are expensive, and if you can find a way to save a couple of bucks by using your parent’s Netflix password, or better yet, remaining logged into your ex’s account, chances are you’re probably going to do it.

Well, looks like we might not be able to for much longer. 

On February 8, Netflix released an update that announced it would be cracking down on password sharing in Canada, New Zealand, Portugal and Spain starting immediately. This comes after the company has been working over the past year to resolve the issue in Latin America.

"We’ve always made it easy for people who live together to share their Netflix account with features like profiles and multiple streams," the announcement read. "While these have been hugely popular, they’ve also created confusion about when and how you can share Netflix. Today, over 100 million households are sharing accounts — impacting our ability to invest in great new TV and films."

Netflix has been falling behind for months now, losing nearly one million subscribers between April and July of 2022, and at one point being the "worst-performing stock of 2022 in the S&P 500, down (62.5 percent) year-to-date."

While the streaming giant still reached its highest revenue in 2022, a not-so-modest figure of $31.6 billion, the declining public interest in the platform and the increasing competition of streaming services are a big concern for Netflix.

The company’s recent introduction of advertisements to the platform and its updated tiered business model was the first strategy it employed in an attempt to boost its growth. Though, many people didn't react positively to this news, especially since Netflix had previously claimed in 2019 that being ad-free was a large part of its brand position.

Despite a (now-hypocritical) tweet from the company in 2017 stating, "Love is sharing a password," Netflix’s crackdown on password sharing will be its next attempt to bring in more potential revenue.

Under this new system, users will have to set their household as the "primary location" for their Netflix account, according to the announcement. If you’re attempting to log into an account and you aren’t in that primary location, Netflix will know, according to this article from Forbes. And it will block your device from using that account and prompt you to sign up for your own plan.

"In countries where the password sharing crackdown is active, Netflix is tracking who shares their accounts via the devices used to connect to the platform. It will enforce the end of password sharing by asking devices to check in periodically in your home location around once a month," according to the Forbes article. 

The only caveat Netflix currently lists in terms of password sharing is for watching while you travel. It ensures in the announcement that users can log into their account while at a hotel or vacation rental. But what about people who want to watch Netflix in a location other than their registered household?

It’s going to cost you extra. 

"Members on our Standard or Premium plan in many countries (including Canada, New Zealand, Portugal and Spain) can add an extra member sub-account for up to two people they don’t live with — each with a profile, personalized recommendations, login and password — for an extra CAD $7.99 a month per person in Canada, NZD $7.99 in New Zealand, Euro 3.99 in Portugal and Euro 5.99 in Spain," Netflix stated in its announcement.

As you might imagine, many people have been highly critical of this announcement, with some even comparing the company to Blockbuster. Even Netflix co-CEO Greg Peters has stated that the company expected to receive a "cancel reaction" following the update on password sharing and expects it "will not be a universally popular move." 

While the change is nothing short of annoying for users and questionable for its infrastructure, password sharing is ultimately already a violation of Netflix's rules. We can’t really blame the company for cracking down on something that they explicitly do not permit in the first place, especially when they’re losing out on big bucks because of it.

It's still a little unclear as to how this vague household rule will affect college students as the announcement mentions households, and college students do often still declare their parent's home as their permanent residence. A spokesperson for Netflix, Kumiko Hidaka, declined to speak on the matter.

With that being said, let me reiterate: As a student, I do not think this change will not be welcomed with open arms. If this system makes its way to the U.S. in the near future, I could see myself moving away from Netflix and increasing my use of the many other streaming platforms that exist today.

And I believe many others would be similarly frustrated and take the same actions — which is exactly the opposite of what Netflix needs right now.

From a user standpoint, I don’t think this will be a positive strategy for Netflix in the short term. I’m not even sure how helpful it’ll prove in the long term either, as the company seems to be losing ground relatively fast.

"Although their plans to reaccelerate growth (limiting password sharing and an ad model) have merit, by their own admission they won’t have noticeable impact until '24, a long time to wait on what is now a 'show me story,'" stated Bank of America analysts in a recent note.

We’ll have to wait and see what the future holds in terms of Netflix’s crackdown on password sharing and its position as a streaming giant as a whole. In addition, it's a frightening but realistic possibility that many other popular streaming platforms could follow suit.

Could Netflix’s new update become the new industry norm, or will it fizzle out?