Three months of 2023 have come and gone, and Netflix’s new rules around password sharing have yet to materialize in the United States.
That’s despite the Netflix’s announcement of a broader crackdown starting in Q1. While the company has rolled out so-called “paid sharing” plans in a handful of new countries this quarter, a spokesperson said Netflix has nothing new to share for users in the United States, its largest market.
The leisurely pace is understandable. In countries where Netflix has already cracked down, it’s frustrated legitimate customers with new hassles and poorly communicated policies. Although Netflix is likely to expand its enforcement at some point, it has plenty of reasons not to rush.
Netflix and password sharing: The story thus far
My colleague Ben Patterson has already written an extensive FAQ about Netflix’s password sharing plans, so I won’t rehash everything here. The short version is that Netflix began testing various countermeasures in Chile, Costa Rica, and Peru last year, and in early February, it rolled out similar policies to Canada, New Zealand, Portugal, and Spain.
In those markets, Netflix uses IP addresses, device IDs, and other data to determine customers’ home locations. To discourage password sharing, streaming Netflix on TV devices outside the home might require extra steps, such as entering an authentication code sent via email, or checking into Netflix’s mobile app at home at least once per month. (For now, Netflix has said that streaming remotely from a phone or computer won’t be a problem.)
Netflix has also introduced new ways to extract extra revenue from password sharers. Account holders can add a sub-account for an extra fee ($7.99 CAD in Canada, for instance), or the sharers can transfer their profiles and watch history into a new subscription. Netflix’s new ad-supported tier ties into these measures, providing a cheaper entry point for users who’ve been kicked off someone else’s account.
Netflix crackdown criticisms
At a high level, this all seems straightforward enough. But as Netflix has put its new password-sharing rules into practice, it’s also created confusion for paying customers and password sharers alike.
Much of this was documented in February by Dan Rayburn, a streaming industry analyst. After talking to more than a dozen customers in Canada, reviewing their customer service chat logs, and monitoring more than 1,000 comments on Twitter, Rayburn highlighted a long list of issues with the rollout:
- Netflix has told customers that it may flag them for “persistent use” outside of the home, but hasn’t explained what counts as persistence.
- Netflix may ask those users to verify their account with a code sent to their email, but won’t say how often they’ll need to do this to stay logged in.
- The company’s support reps supposedly told a military member that they’d need a secondary account to watch Netflix wherever they might be stationed. This suggests that anyone who frequently works or travels overseas could run into problems.
- Netflix hasn’t said how often users will be allowed to change their home location to address things like extended vacations or work assignments.
- Language on Netflix’s website has indicated that users with multiple Wi-Fi networks may run into problems with the service. (This raises questions about whether Netflix will work with T-Mobile home internet, whose IP addresses change over time. Neither Netflix nor T-Mobile have commented on this.)
Given all these issues and the lack of clarify from Netflix, Rayburn concluded that “paid sharing” isn’t ready for larger markets such as the United States. “If Netflix doesn’t backtrack on how they are rolling this out and realize how complex they have made it, their subscriber churn could get ugly,” Rayburn wrote.
The long game
Netflix will likely report quarterly earnings on April 18, and in the past has used its shareholder letters to deliver updates on the password-sharing front. That means the company could have more to share in a couple of weeks.
Even so, the rollout will likely be gradual, as the company tweaks its policies to avoid enraging too many of its paying customers. My overall read that Netflix’s paid sharing initiative at least as much of a fishing expedition as it is a crackdown. Those who really want to keep sharing passwords may still find ways to do so—either by dealing with Netflix’s authentication hurdles or by employing more elaborate workarounds—while others will take the path of least resistance and pay up.
Sign up for Jared’s Cord Cutter Weekly newsletter for more help navigating the post-cable world.