Netflix has internally confirmed an intention to begin cracking down on password sharing before the end of 2022, according to the New York Times.
It had previously been reported that the streaming giant was trialing adding a surcharge to any household that watched Netflix content using another household's account, but new reports have now confirmed it will be rolled out to every territory where it operates; meaning your Netflix password-sharing days may soon be over.
In a letter to shareholders as part of Q1 revenue results back in April, (opens in new tab) the streaming giant's executives stated that around 100 million households shared a password with another account. So, despite Netflix boasting 221M paying subscribers, the real number should be much higher.
As a result, Netflix trialed a system in Chile, Costa Rica, and Peru where a $2.99 surcharge was added to accounts that wanted to share their credentials outside the household.
The trial must have been a success, because the New York Times reports that Netflix's executives have told employees that a crackdown on password sharing is likely to begin in the last three months of 2022 - meaning as early as October.
The news comes as Netflix scrambles to increase revenue after a horrible period in the company's history.
On April 21, news broke that the streamer had lost 200,000 subscribers since the start of 2022, and, as a result, Netflix's value fell by more than $54 billion. Subsequently, Netflix canceled a series of shows, shelved many in-development projects, including one from Prince Harry and Meghan Markle, and closed Tudum, its editorial presence.
A series of belt-tightening measures, now accompanied by news that password-sharing will be coming to an end.
What does this mean for me?
Simply put, if you share your Netflix account with anybody outside of where you live, it'll cost you more to do so. You might split an account with a partner who you currently don't live with, or with your parents, while you're away studying, or perhaps you split the cost with a group of friends. Now, it'll cost you to do that.
It'll also be an annoyance for lots of people. If you have children who stay regularly with grandparents, potentially, you'll now need to pay a surcharge to have Netflix on a device in their home.
With the squeeze on incomes in the cost of living crisis, this surcharge will likely convince many Netflix subscribers to quit the service entirely. The streamer's executives will presumably have bet that a few more paying subscribers are worth the pain of the inevitable backlash.
Analysis: Why is Netflix doing this?
While Netflix continued to grow and its share price was on the rise, there was no reason for the company to do anything that might make it unpopular with subscribers, but now it needs cash.
Amid increased competition from other streaming services like HBO Max (opens in new tab), Hulu (opens in new tab), and Disney Plus, not only has the scramble to grow their subscriber base become more difficult, but those services, all of which are backed by broadcasting giants, now hoard their content, forcing Netflix to put more and more money into making its own movies and shows.
Amid a myriad of cancelations and lay-offs, Netflix is tightening its belt internally, but it's clearly not enough. As we said above, this move will anger people, especially right now and could lead to a raft of cancelled subscriptions, but if the change generates more income for the company and Netflix can boast growing subscriber numbers again in 2023, the company's executives will regard it as a gamble well worth taking.
Correction: May 11, 2022
An earlier version of this article used the word ‘Confirms’ in the headline - this has been removed, and the copy edited to reflect this, as TechRadar seeks to confirm the story from its own sources. We shall update the article in due course when other comment appears.
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