Netflix was immediately criticized for imposing an additional charge on subscribers who share their accounts to people other than their immediate family members. Many users are, particularly younger ones, left to wonder how this change will impact their bottom lines.
“On the business front, I understand Netflix’s move. But as a user, I find it frustrating,” says Vel Mensah, a 33 year-old Netflix user in New Jersey. Similar outrage was heard on Twitter. some saying that they wouldn’t use Netflix at all without being able to share an account.
Netflix is considering price hikes to increase its revenue in response to slow subscriber growth. Lost revenue from password-sharing has affected the company’s ability to “invest in great new TV and films,” it said.
It could lose large portions of its paid subscription base, which is estimated to be 200 million people. Netflix is most popular in the United States with younger consumers, who support password sharing much more than older generations: A 2021 survey conducted by tech research site Comparitech found that millennials and Gen Zers are around twice as likely as Gen Xers and baby boomers to both share their streaming passwords with non-paying friends and family and accept free access to others’ accounts themselves.
Here’s what you need to know about the new rules.
Who is affected by Netflix’s new limits on password-sharing?
Netflix said it was only currently experimenting with the possibility of charging password sharing fees in Chile, Costa Rica and Peru. TIME has been told by a spokesperson at Netflix that users must opt in to follow the rules.
Users in America and elsewhere around the globe took the news as a sign that there might be more stringent rules. Mensah said the rule leaves her “wondering what’s next.”
How are prices and password sharing rules currently in place in the US?
Netflix subscribers in the US can use their account on one, two, or four screens at once and prices reflect the number of screens available—ranging between $9.99 and $19.99. When Netflix launched its streaming service in 2007, subscribers received one hour of streaming credit for every dollar they were paying for Netflix’s DVD rental service. They could stream 18 hours per month if they paid $17.99 for the rental plan, which allows them to rent 3 DVDs at once. Netflix’s first streaming-only plan was launched in 2010, costing $7.99 per month.
All plans’ prices have been increasing steadily in recent times, but the most recent increase occurred in January. Plans now cost between $9.99-$19.99 with streaming available on 4 screens for the highest priced plan. Even though all the accounts have the master password, they are meant to belong to the same household. However, users may watch on separate screens. However, if you share a password with someone who lives elsewhere, Netflix doesn’t take any action against you right now. That’s what users are worried about, especially as prices rise.
Alex Parrella, a 33 year-old subscriber in Massachusetts, says he’s beginning to question whether he’s getting enough value from Netflix. “If [prices] keep creeping up, I’m not sure it’s going to be worth it for me,” he says.
What about password-sharing in Chile, Costa Rica, and Peru—the places affected by the new rules?
Netflix subscribers from Chile, Costa Rica and Peru will have the option to choose between two options in the next weeks. They can either start paying a fee to add up to two “extra member” accounts to their subscription, or they can enable users who are outside their household to transfer their existing profile information—including viewing history and personalized recommendations—to their own new account. Even this change is being introduced carefully: these features are optional for the time being, which means subscribers won’t be automatically charged for sharing, Netflix’s spokesperson says.
Netflix said in its release: “We’ll be working to understand the utility of these two features for members in these three countries before making changes anywhere else in the world.”
Thirty-seven-year-old subscriber Justin Balich says that even the company’s piloting of a password-sharing crackdown doesn’t bode well. If a user is paying for multiple people to log in, they shouldn’t need to be under the same roof, he says: “if one of those devices belongs to your best friend, that should be up to you.”
A bigger picture
Netflix’s announcement is making some users take a closer look at which streaming services are actually providing them enough value. The popularity of TV series and movies are increasing as studio-owned streaming services such as Paramount+ or Peacock use content from Hulu and Netflix to create their own libraries. Hulu has raised its prices which is creating problems for people with lower budgets. A subscriber to Netflix, Hulu and Amazon Prime Video would pay between $43 to $65 per month. This is roughly the cost of a basic cable bill.
It can be difficult to balance customer satisfaction and cost growth for streaming services. Netflix for example is being scrutinized by users to ensure it does it right.
Mensah says, “Netflix needs to tread carefully not to take advantage of its established customer base.”
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