Netflix releases, rescinds new password sharing rules

Netflix once tweeted that “Love is sharing a password.” If that’s the case, Netflix has had enough of love.

The multi-billion-dollar streaming service has been threatening to crack down on password-sharing for years, beginning in earnest recently.

On Jan. 31, news site The Streamable spotted an update in the Netflix Help Center detailing how accounts may or may not be shared. This page seemingly announced some drastic changes to the Netflix status quo. While accounts could previously be shared with little to no geographic restrictions, the service seems to be shifting their guidelines to be based around individual households.

With over 50 percent market penetration in North America, the company has had to get creative with its strategies to increase profit. The company estimates that 100 million users access the site with a shared password, meaning that they do not pay for the account. By shifting to a model where the account is strictly tethered to a single location, Netflix hopes that the excluded users will create their own accounts.

The announcement sparked massive criticism, prompting Netflix to state that they did not mean to post it. The guidelines apply to a test launch in Chile, Costa Rica, and Peru which, depending on its success, may expand to other markets. However, the company confirmed in a fourth-quarter 2022 earnings report that they will be implementing “enhanced efforts” to limit password sharing in the United States by the end of March 2023.

The now-removed Help Center update explained that instead of accounts simply being accessible to whoever has the right login credentials (as is currently the case), accounts must now be linked to one Wi-Fi network at a “primary location,” which each device on the account would have to connect to at least once every 31 days to remain a “trusted device.” A device will lose its “trusted” status and be blocked from accessing the service if the user fails to watch something on the correct network once a month. Once a device is blocked, even if it is blocked incorrectly, the user must contact Netflix to get it unblocked.

On top of having to continuously sign in to the primary location’s Wi-Fi, users would no longer be allowed to sign in outside of that location, and the device may be blocked from the account regardless of how recently it was used in the primary location. The policy includes a small compromise for users going on vacation, allowing account holders to request a temporary sign-in code allowing access for seven consecutive days outside of the primary location. It is unclear how often a user is allowed to request a code.

Netflix tracks account activity, location, and device usage with information including IP addresses and device IDs, allowing them to strictly enforce this new policy.

These changes would bring massive disruptions to many existing accounts. Netflix accounts are commonly shared among families, but this update is not compatible with many living situations. As critics have pointed out, this would exclude families with separated parents, children away at college, long-distance relationships, and military families with a deployed family member. Even for families who live together 100 percent of the time, this model is inaccessible if they happen to take a vacation longer than seven days.

Unsurprisingly, the update sparked widespread backlash online. Netflix’s 2017 tweet reading “Love is sharing a password” has gone viral in response, with many pointing out the irony between the statement and their latest update.

Netflix’s current anti-account-sharing measure is a limit on how many devices can watch simultaneously. Basic accounts allow only one, the next tier allows two, and the Premium plan allows four. The announcement upset many users who upgraded their account in order to share with family members, but will no longer be able to if the measures are implemented.

There is currently a way around this in the Latin American test launch, allowing account holders to pay an extra $2.99 for every user outside of the primary location.

While Netflix hopes that these stringent new rules push some of the 100 million password-sharers to get their own accounts, many feel that the update is a jump too far and that will cause existing account holders to cancel. Netflix gained popularity as a convenient way to watch movies and TV, so ease of access is still important to much of its user base. Between this announcement and a relative lack of compelling original content in recent years, this may just be the last straw in deciding that the up to $19.99 per month subscription fee is no longer worth it.