Netflix Launching New Plan To Limit Password Sharing

by Blake Ells

Netflix numbers have been on the decline. It’s not helpful that so many people share their passwords.

“Widespread account sharing between households undermines our long-term ability to invest and improve our service,” Netflix director of product innovation Chengyi Long said in a blog post.

The streaming giant is scheduled to release its second quarter earnings on July 19, and it previously estimated that it’s lost two million subscribers globally. There’s some optimism on Wall Street, however, due to the massive success of the fourth season of Stranger Things.

Some estimate that if it could find a way to cut down on the password sharing, it could drum up an additional $1.6 billion in annual revenue. At least, that’s an estimate by Wall Street firm Cowen.

So how can they make this work and when will you be forced to stop using your ex’s account?

The strategy won’t begin in the United States. According to Variety, they’ll roll this plan out in five Latin American countries. Customers will have an option to add an extra home for a smaller fee. The new plan will begin in Argentina, the Dominican Republic, El Salvador, Guatemala and Honduras. The option to add an additional home will be significantly less expensive than a single subscription.

Netflix did something like this in March in Chile, Costa Rica and Peru. Users were offered an opportunity to “add an extra member.” The option allowed customers to add users from outside of their household for a fee. Basically the same idea.

How Bad is Netflix Password Sharing?

Netflix estimates that customers share their passwords with more than 100 million non-paying households worldwide. Approximately 30 million of those are in the United States and Canada.

In Argentina, the cost to add an additional home to an account will be 219 pesos per month. In the Dominican Republic, Honduras, Guatemala and El Salvador, the add-on will cost $2.99 a month. If you’re on the Basic plan, you can add one extra home. If you’re on the Standard plan, you can add up to two extra homes. Premium subscribers can add up to three extra homes.

It’s very similar to the existing concept in Chile, Costa Rica and Peru. There, users can add up to two “Extra Member” accounts for $2-$3 each month.

The actual Terms of Service specify that the password sharing boundaries mean “individuals in the household.” It doesn’t mean that those people have to be inside the house. So it’s fine if you’re out of town or on an airplane. They’re just not thrilled about it if you don’t live in the same house. The new strategy isn’t coming to the United States soon, but if the numbers continue to dip, it’s possible.