For many years, Netflix (NASDAQ: NFLX) has largely ignored the fact that password sharing was going on among friends and family members through household accounts. Recently, however, the company announced that it was going to crack down on this occurrence.
In a blog post, Chengyi Long, director of product innovation at Netflix, says, "While these [household plans] have been hugely popular, they have also created some confusion about when and how Netflix can be shared. As a result, accounts are being shared between households - impacting our ability to invest in great new TV and films for our members."
As part of this crackdown, Netflix has revealed that it would create a test in which users are permitted to add up to two more members within their household to their Netflix accounts. This test would occur in Chile, Costa Rica, and Peru, and cost up to three more dollars in addition to standard monthly Netflix fees.
Although Netflix has encouraged password sharing in the past, the company is now saying that this act is "impacting our ability to invest in great new TV and films for our members." Netflix will not prohibit password sharing entirely, however.
About a year ago, Netflix also made efforts to limit the act of password sharing through the usage of an account verification tool in order to keep unauthorized users from freeloading off the accounts of verified users. This newer Netflix feature, however, has "transfer profile" and "add an extra member" options, which suggests that the company is methodically considering ways in which it can expand, given that the amount of subscribers is decreasing dramatically.
"We recognize that people have many entertainment choices, so we want to ensure any new features are flexible and useful for members, whose subscriptions fund all our great TV and films," Netflix said in a statement. So, although many users may be disappointed and discouraged with the fact that Netflix is cracking down on password sharing, it will provide a bit more monetary gain for the company, as its number of users who are signing up are diminishing.
Whether it is worth the extra cost for Netflix in the end will be determined with time, and potentially measured by the test that will be conducted throughout Chile, Costa Rica, and Peru.