Netflix Restricts Password Sharing, Leaving Some Angry and Confused

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A Netflix logo is pictured in Los Angeles, California, U.S., September 15, 2022.

Every three months, Brandy Andersen fills her Jeep with clothes, kitchen supplies, a box fan and a small TV and relocates to a new city. A traveling emergency room nurse for the past three years, Andersen has worked in Brooklyn, Boston and D.C. and is now based in a remote part of Northern California.

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

Andersen is one of many longtime Netflix customers upset about the company’s new crackdown on password sharing, which launched in the United States 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 using a Netflix log-in for more than 31 days at a different location to get a separate account or pay $7.99 a month to be added to the main account.

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

“I’m not paying eight more dollars, I’m just not,” says Andersen, who plans on canceling her $19.99 a month premium plan. “I’m paying plenty as it is. I understand the price has to go up over time – that didn’t bother me at all – but to say now I can’t use it for myself? That’s crazy.”

Can Netflix weather the backlash?

Netflix didn’t rush into this plan and has probably accounted for some public anger and loss of some subscribers. The company started testing enforcement in smaller markets last year and rolled it out in Canada this year. A small amount of churn is expected and probably 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 their numbers are up.”

Popular quality shows and movies are all the company should be focused on, Greenfield says. “The best way to get people signed 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 a crackdown. Around 40 percent said they had no intent to make 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 just the squeaky wheels getting online to voice their complaints. Most are just the piggy backers I assume, disgruntled that they have to pay,” said Alicia Reese, a Wedbush equity research analyst.

Not all Netflix customers are upset about the crackdown. 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 rising. Netflix has said 100 million people around the world stream using borrowed accounts.

“We subscribers are getting either higher rates or lesser services than might otherwise be the case if the freeloaders were to cough up the subscription fee,” said Diane Averill, of Pittsburgh, in an email. “And Netflix employees might get better wages if the company were more profitable, so a lot of people are potentially being cheated by the cheaters.”

Netflix declined to comment about the response from users.

“This is an important transition for us, and so we’re working hard to make sure that 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 for the U.S., our paid membership base is now larger than prior to the launch of paid sharing and revenue growth has accelerated and is now growing faster than in the U.S.”

What’s next for impacted streamers

Some people are in situations where paying more money just doesn’t make sense. For example, paying subscribers who split their time between different locations, either for work, because they have a vacation home or for family reasons.

But many people who got notifications are exactly who Netflix is probably targeting: parents sharing with college students, adult children who share accounts with their older parents and friend groups splitting the costs of a few subscriptions.

Years ago, Ammy Woodbury and her friends went in on a premium Netflix account together. She says she gets that the company thinks its business model isn’t working anymore, 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 a few movies. But then we’ll shut it down again,” said Woodbury, 49, who lives in Santa Clara, Calif. “They forced me to actually evaluate 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 for adding members, Taylor called the company to quit for good.

A customer support representative told her that she could keep sharing 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 their WiFi and finally logs them back into her account from their TV. She was told to do it every 14 days and just pay her original $9.99 a month. She decided not to cancel.

“They’re insane,” 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 for an account she shares with her older parents, but she is planning on canceling.

“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 like we’re not willing to pay for the things that we want, it’s that you built your service on the brand that you could share with your family and now you’re changing it.”

There is no shortage of alternatives. But for anyone thinking about switching so that 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 mover on this, and I would expect to see the other streamers follow suit over time.”

What exactly are Netflix’s password sharing rules?

While Netflix has been talking about its password plans since last year, the notifications rolling out this week in the United States were effective immediately and caught some people off guard. Many were confused about how the company was going to enforce the plan and surprised to find that it applied to them. Here is 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 from elsewhere can be added for $7.99 a month.

– The restrictions appear to only apply to televisions and not mobile devices for now. Once you are successfully logged in on a smartphone or tablet, you should be able stream on it from anywhere.

– You can still travel without issues for up to a month. People will need connect at the primary location once every 31 days to avoid being logged out of the account.

– If you are moving or plan on being away for more than 31 days, you can change your household location.

– It doesn’t matter what tier you pay for or your reasons for being away from the primary address. The company does not have any exceptions for more unusual cases like deployed members of the military.

– Netflix is mostly using IP addresses to determine where people are logging 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 extra 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 locations will just be logged out.