Netflix's new password-sharing fee is just the tip of an expensive iceberg

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I was recently watching a dating segment on some TV show (don’t judge) and noticed one of the key questions for all the potential suitors was, "Do you have your own Netflix account?”

What an odd question, I thought. Why would that make a difference -- and why wouldn’t these guys have Netflix?

As the game progressed, though, it became clear that only one of all the adult men had his own account. The rest were using their parent's, ex-girlfriend's, or friend's login. Turns out that "having your own Netflix account" did make one guy more "attractive" than the others.

I should not have been so surprised that so many adults don't have their own accounts. Roughly 14% of Netflix users are letting freeloaders binge Lupin through their accounts for free.

Ever since Netflix announced that it’s testing a $2.99 surcharge for those who share their Netflix accounts with people who live outside their household, I’ve been thinking of those bachelors and all the others who are streaming on someone else’s dime.

Netflix made it clear in a post called “Paying to Share Netflix Outside Your Household” that the decision boils down to money:

 “We’ve always made it easy for people who live together to share their Netflix account, with features like separate profiles and multiple streams in our Standard and Premium plans. While these 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.”

Two years ago, Netflix spent almost $12B on content. It was predicted to spend $17B last year. In that time, competitors like Amazon Prime Video, Paramount+, HBOMax, and particularly Disney+ have surged in subscribers and possibly drawn viewers away from Netflix to their own variety of attractive, intellectual-property-based characters and content. To stay competitive and hold onto paid (and unpaid) eyeballs, Netflix will spend more on content in 2022 and beyond.

Amazon Prime Video Channels

What would happen if Amazon (above) implemented a similar surcharge? (Image credit: TechRadar)

It’s fair to also assume there’s a straight profit motive here. Netflix has known, based on IP addresses, that people who live sometimes hundreds of miles apart are accessing the same account. It’s a significant, untapped revenue stream (money it needs for Bridgerton 3 and Stranger Things 4).

If the test goes through, it’s also a watershed moment not just for all those Netflix Password sharers, but for other password-based service and content systems that have not traditionally relied on location to decide who is and isn’t a qualified member.

Just imagine what would happen if Amazon implemented a similar surcharge. How many people are using your Amazon Prime account?

Many of these platforms have already been slowly working through ways to limit the number of times paid accounts could be used. Microsoft, for instance, will limit the number of systems that can share an Office365 account. If you forget to remove it from one old computer before loading the software on a new one, Microsoft won’t let you and will force you to deactivate the account on the original system.

Adobe’s Apps and Cloud will force you to log out of, say, Photoshop, on one system before loading it up on another

Netflix already limits the number of people who can simultaneously watch content on an account (two for a basic, four for a premium).

Still, there are many of us who have readily shared login credentials for Netflix, Hulu, and countless other services with family and friends, assuming that as long as we weren’t all using it at the same time and at least one person was paying, it was all good.

That may soon no longer be the case as companies change their definition of membership. Credentials are not enough. Location (based on IP) can matter.

It’ll be a harsh and expensive new reality for many -- especially those bachelors.

Lance Ulanoff
Editor At Large

A 38-year industry veteran and award-winning journalist, Lance has covered technology since PCs were the size of suitcases and “on line” meant “waiting.” He’s a former Lifewire Editor-in-Chief, Mashable Editor-in-Chief, and, before that, Editor in Chief of and Senior Vice President of Content for Ziff Davis, Inc. He also wrote a popular, weekly tech column for Medium called The Upgrade.

Lance Ulanoff makes frequent appearances on national, international, and local news programs including Live with Kelly and Ryan, the Today Show, Good Morning America, CNBC, CNN, and the BBC.