This week, Netflix published a primer on how it’s upcoming, more restrictive rules on password sharing will impact subscribers. A Frequently Asked Questions document explaining the ins and outs was published Wednesday on the company’s help center pages, though it was later taken down since it was intended to apply only to its subscribers in Chile, Peru, and Costa Rica where a trial of the new procedures in currently underway.
Nonetheless, when these restrictions are rolled out globally later this year, they are likely to be modeled on these early trials. The company estimates that approximately 30 million households in the U.S. and Canada share passwords in a way that will be impacted by the new restrictions.
According to the support document, primary account holders will be able to share account access with members of the same household only, and can add “outside users” for an additional $3 per month. Every time an outside user attempts to log in, the primary account holder will receive a 4-digit verification code that the outside user must enter to gain access. When a user travels, access will be allowed from a laptop, tablet, or other mobile devices as long as it has been connected to the user’s home network (WiFi) at some point in the prior 31 days.
This major change to policy is scheduled to effect in Q2 and could have many unintended consequences for both Netflix and the streaming landscape overall. Netflix could suffer a significant loss in subscribers if many become frustrated by the new rules. Alternatively, budget-conscious streamers may instead opt to downgrade to Netflix’s newly launched, ad-supported tier of service which is significantly less expensive at $6.99/month than the ad-free Premium plan at $19.99/month. Of course, the company would make up for a lower take from subscribers with new revenues coming in from advertisers.
It’s not an overstatement to say that every media company with an interest in streaming is watching the Netflix password crackdown closely in order to learn how they can optimize their own revenues.
See also: How Will Password Sharing Crackdown Impact Netflix? 4 Possible Outcomes (Forbes) and
Netflix once said ‘love is sharing a password.’ Now users are heartbroken. (Washington Post)
