How does Netflix prevent you from sharing your password?

Netflix plans to start down subscribers in the US sharing their streaming service password at the end of March. But how exactly would that work?

Initial reports and trials in other countries suggest that the effort to discourage password sharing will be relatively gentle in its first iteration, relying on a combination of technology and user conscientiousness to push serial over-sharers to pay more for the privilege.

Netflix will likely use a person’s geographic location, as determined by the IP address of each Internet-connected device, to figure out which people count as “family members” who live together, Insider reporter Sarah Saril told CBS News.

“When you watch TV, it shows exactly where you are,” said Saril. “They just want people in your household, at your address, to look.”

Netflix says on its website that the company uses “IP addresses, device IDs, and account activity of devices logged into the Netflix account” to determine which devices are in the same household.

“People who don’t live in your household must use their own account to watch Netflix,” the site says.

Stricter rules

Netflix told investors last week that it would roll out stricter sharing rules at the end of March. According to the service, more than 100 million households currently share Netflix passwords. That “undermines our ability to invest in and improve Netflix over the long term,” the company said in a statement accompanying its latest quarterly results.

It’s a big turnaround for a company that was six years ago tweeted, “Love is sharing a password.” And Netflix executives know there will likely be a backlash.

“This isn’t going to be an overall popular move, so there will be current members who aren’t happy with this move. We’re going to see a bit of a backlash to that,” Greg Peters, Neflix’s recently promoted co-CEO, told investors at called last week.

The company tried a version of this last year, when it restricted password sharing in Latin America and asked members to pay an additional fee to share with non-household members. The effort had mixed results. Tech publication Rest of World called the test “a mess” and reported that the new policy was rolled out inconsistently. Many users were able to avoid the extra charges, while others were urged to pay more and responded by canceling their accounts, the outlet said.

Netflix predicted a similar reaction in the US. “Based on our experience in Latin America, we expect some cancellation reactions in every market when we roll out paid sharing,” the company told investors, noting that it could hurt its viewers in the short term.

Netflix has said it recognizes the new policy is a big change for customers, and has tried to cushion the blow by touting new features that should make the transition less painful. That includes showing members all devices using an account and making it easy for people to transfer individual profiles to separate accounts. Last fall, the service also introduced a dashboard that allows account users to sign out individual devices.

“Difficult Conversations”

Netflix has not specified how much these sub-memberships might cost. However, in trials in Chile, Costa Rica and Peru, sub-memberships increased an account’s monthly cost by a quarter or a third, according to Variety. U.S. analysts who track the company expect an additional fee for members of about $3 to $4 per month, according to Netflix’s most recent earnings call with investors.

“This is where these tough conversations come in – who’s worth paying an extra fourth of your subscription fee each month?” Saril joked.

If Netflix notices that too many locations are using the same account, it will deploy a technology nag: a prompt asking users to “verify” some devices via authentication codes.

“When a device outside of your household logs into an account or is in persistent use, we may ask you to authenticate that device before it can be used to watch Netflix,” notes a frequently asked question from the company.

Speaking to investors last week, co-CEO Peters described this as a way to “give them a little push and create features that make the transition to their own account easy and simple.”

The company’s hope is to dramatically increase its paid viewership. While Netflix is ​​the leader among streaming services by number of subscribers, it controls only 8% of TV time in the US, executives said during the investor call.

However, it’s a fine line between urging users to pay more and not scaring off too many casual viewers.
Netflix also says users won’t be charged automatically if the system detects too many location streams, nor will accounts be canceled. That has led some observers to question how effective the password crackdown will really be.

“All signs point to the most aggressive Netflix plan to get into the first iteration of its paid sharing rollout is to continue to titillate offenders with email reminders and notifications,” wrote Todd Spangler in Variety in November.

Leave a Comment