The streaming giant is rolling out alerts asking users to verify they are authorised to watch on the account to be able to keep viewing.
Streaming giant Netflix is considering a crackdown on password sharing, in what is likely to be unsettling news to the platform’s legion of freeloaders who enjoy the service through the goodwill of family and friends.
A trial appeared on multiple user accounts which said: “If you don’t live with the owner of this account, you need your own account to keep watching.”
“This test is designed to help ensure that people using Netflix accounts are authorised to do so,” said a Netflix spokesperson.
In the trial, users are able to verify they are allowed to access the account by code sent via email or text message. Users can also choose to verify at an undetermined later time. If they can’t confirm they’re an authorised user, viewers will be prompted to set up a new account.
Netflix and other streaming platforms like HBO Go, Amazon Prime and Disney+ permit users to create multiple profiles within the account, but the terms and conditions make it clear they are only to be used by people in the same household.
For now, there is no confirmation whether the trial will be rolled out across the network.
The update comes as Netflix’s viewership has splooshed during the pandemic, reaching 200 million users last month and with its stock up nearly 50 percent since last March.
Is it a good thing?
Streaming platforms have long been grappling with how to handle password sharing and whether to marshal the resources to tackle it.
Research company Magid claims 33 percent of Netflix users share their password with at least one other person.
Some claim the password crackdown is a positive development.
“It’s pretty difficult to estimate the impact that it would have, but my sense is that it would be a net positive in the long term because I think the number of password sharers right now is a fairly meaningful number,” CFRA Analyst Tuna Amobi told Yahoo! Finance.
“There would be some immediate negative impact in terms of churn. But it’s very easy to see how some of that impact would cancel out in terms of potential uptake from certain customers who were affected,” he said.
According to a 2020 report by research firm Parks Associates, password sharing cost streaming services $9 billion in losses. They projected the figure will reach $12.5 billion by 2024.
But it’s not like Netflix is in financial distress. The company’s revenue in the fourth quarter of 2020 exceeded $6.6 billion, and it expects to spend $19 billion on content in 2021.
The potential crackdown has implications beyond the sharing of passwords. It’s also considered an account verification test that can be used for security and anti-fraud measures.