Streaming move

Netflix looking to crack down on password sharing

Netflix: losing revenue

Netflix is considering a crackdown on password sharing to claw back substantial revenue being denied to the streaming service.

Password sharing has led the company to lose many subscribers. Since hitting a peak at the start of the COVID-19 pandemic, subscriber numbers have been falling, though this is also a result of consumers cutting back amid the rising cost of living. 

Co-CEO Reed Hastings told senior executives at a company gathering that password sharing has gone on too long and the pandemic masked the extent of the problem, according to Wall Street Journal source.

A move to end the practice would hit up to 100 million viewers who currently share their subscription with family and friends.

Netflix has updated its policy, saying that passwords can only be shared with those living in the same household. 

It plans to use IP addresses to track password sharing and shut it down, unless consumers would like to add an additional fee to share the password. However, it is likely to phase in the ban in order to avoid losing even more consumers.

Netflix has 223 million subscribers globally, but according to research from Digital i, a quarter are believed to share account passwords.

An analyst at Cowen Inc estimated the company could generate an additional $721 million in revenue in the US and Canada if it received subscription fees from each one. 

Netflix’s share price has fallen by half this year, putting it in the top 25 for worst-performing S&P 500 constituents.

One issue to be resolved is how a Netflix customer could use the service while away from their home. 

However, its plans have been boosted by the UK Intellectual Property Office which said the distribution of logins may be illegal.

It stated: “There are a range of provisions in criminal and civil law which may be applicable in the case of password sharing… these provisions may include breach of contractual terms, fraud or secondary copyright infringement, depending on the circumstances.”

Netflix has never taken nor indicated that it plans to take legal action against password sharers.

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