For years, many Netflix users have enjoyed sharing account passwords with friends and family outside their household. But based on recent tests, it appears this common practice may soon come to an end.
According to multiple reports, Netflix has begun notifying some users they need to start their own accounts if they don‘t live with the primary account owner. This signals the streaming giant may soon roll out technology preventing password sharing between households.
Why Is Netflix Cracking Down on Password Sharing?
Password sharing likely impacts Netflix‘s revenue, but just how many users participate can be hard to pin down.
Back in 2017, networking equipment company Sandvine estimated 1 in 5 Netflix users were mooching off someone else‘s account. A Magid study the following year put the number even higher, with 35% of millennials admitting they share passwords for streaming services.
While Netflix has taken a hands-off approach to password sharing until now, analysts say this likely represents a missed opportunity for generating more paid subscriptions.
As MarketWatch senior analyst Michael Pachter estimated in 2019, Netflix could potentially be missing out on $192 million per month in fees from password sharers. That could add up to billions in lost revenue per year.
With intensifying streaming competition from Disney+, HBO Max, and others, there is increased pressure on Netflix to tap into this potential revenue stream.
How Will Netflix Enforce the Rules?
Based on Netflix‘s recent tests, it appears the company has developed tools to track what devices are logging into an account and pinpoint their location.
There are a few ways Netflix could leverage this technology to crack down on password sharing:
Comparing IP addresses – Netflix can identify if multiple households are accessing one account by looking at the IP addresses devices are using to log in.
Limiting number of devices – Streaming services often limit the number of concurrent streams. Netflix currently allows between 1-4 depending on the plan. They could attempt to restrict this further.
Requiring location access – Netflix‘s mobile app could potentially leverage phone GPS to confirm users are accessing the service within their home area.
Prompting verification – The popups some users have reported about needing their own account could become more widespread.
Blocking users – Netflix may simply block users who appear to be logging in from outside the account owner‘s household for an extended period.
VPN services allow users to mask their IP address and location. However, using a VPN may violate Netflix‘s Terms of Service. And if Netflix employs multiple restriction methods, VPNs may only provide a partial workaround.
What Do Other Streaming Services Do?
Netflix isn‘t the first service to grapple with the issue of password sharing. Spotify famously restricted concurrent streams on Family Plans back in 2019 so friends and roommates couldn‘t take advantage of the feature.
HBO announced last year it would be enhancing enforcement against password sharing to direct freeloaders to sign up for their own accounts.
Showtime‘s updated Terms of Service also now states users should not share credentials outside their household. And services like ESPN+ and YouTubeTV have long limited simultaneous streams to discourage sharing.
While most streaming platforms technically prohibit password sharing, Netflix may be the first to employ robust technical measures to enforce these policies across a broad user base.
Alternatives for Budget-Conscious Streamers
If you‘ve gotten used to watching Netflix for free through someone else‘s account, the upcoming crackdown may be disappointing. However, there are still plenty of legal and affordable options to access streaming content without paying for a full Netflix plan.
Try Free Streaming Services
Services like Tubi, Pluto TV, and Crackle all offer ad-supported free movies and shows you can access without an account. There are also free options built into many devices, like IMDb TV on Fire TV and The Roku Channel.
Internet-based TV services offer low-cost live TV streaming with minimal equipment needed. While advanced IPTV can have a learning curve, basic offerings start under $10 per month with thousands of channels.
Use Free Netflix Trials
If you still want direct access to Netflix, take advantage of free month-long trials they offer new subscribers. You can cancel before the trial ends to avoid being charged.
Split Costs on a Plan
While you may no longer be able to use a password from outside households, sharing the cost of a plan with roommates or family that you live with can make Netflix more affordable.
Secure Your Accounts with Strong Passwords
Make sure you use unique strong passwords and enable two-factor authentication where available. This will help prevent your accounts from getting compromised.
What Does This Mean for Netflix?
While restricting password sharing could lead to an influx of paid accounts, it does risk alienating some users. If enough people refuse to pay for their own subscription, this could mean a net loss of revenue.
But with 132 million paid memberships already, Netflix may feel the potential gains outweigh the risks. And preventing password sharing could positively impact the company‘s stock value by demonstrating higher paying subscriber counts.
If Netflix‘s crackdown proves successful, other streaming players would likely follow suit. This could make password sharing a thing of the past across all major platforms.
That said, Netflix does have some incentives to take a moderate approach. If they completely restrict all forms of account sharing, it could drive users to competitors.
Netflix may ultimately allow some form of limited password sharing, such as for an additional fee. For example, Spotify provides a family plan for up to 6 users in the same household for a higher monthly cost.
But the era of casually sharing a Netflix password with your old college roommate may truly be coming to an end. The rise of robust account security makes it easier than ever for streaming platforms to identify and restrict unauthorized access.