Netflix cracks down on password sharing | Business

Rachel Wenitsky is an obsessive rule follower, something she says has been famous throughout her life. But there’s one rule he — along with at least 100 million others — is very comfortable to ignore: He shares passwords for streaming services with family members outside his home.

After years of discreetly allowing password sharing, Netflix is ​​cracking down by sharing logins with anyone who doesn’t live full-time at the same address. For people like Wenitsky, a TV writer in Los Angeles, this is a step too far.

“If the price to pay for owning any streaming service is for Netflix to send their full force of security to my house to prevent me from sharing my passwords with my mom, so be it,” Wenitsky said.

Netflix hasn’t opened doors yet, but is said to be coming after those who share passwords and are testing programs in Peru, Costa Rica and Chile to get people who borrow passwords to pay for their own streams.

This is the latest sign that the way we watch and pay for TV is at a crossroads. With inflation at a 40-year high and as global markets remain volatile and there is talk of a recession, consumers are rethinking how much money they want to put into subscriptions.

The top eight streaming services will now cost you nearly $60 per month combined if you have the cheapest version of each, coming close to the cost of cable.

To combat this, sharing passwords with friends and family has become a common practice. At the same time, streaming companies are trying to compensate for their own financial difficulties, with layoffs, price increases, more ad options or simply closing. The pandemic was a boon to streaming companies, but now they have to contend with real-world activity again—box office hits are back, bars and parties are packed and workers are back in the office.

The result is an industry that is not aligned with the way people use its products. This is no longer just a cheaper and ad-free cable alternative, it’s also a busy terrain. Netflix’s newfound passion for password enforcement breaks the seal on something streaming companies have long avoided: being clear about policy sharing and enforcement, baffling millions of TV fans.

“If it feels like a structural thing these companies have to work on, but don’t think it’s a consumer responsibility,” said Ned Riseley, an actor and singer in Brooklyn, NY, who sang a song about passwords with Wenitsky.

Sharing is mainstream

For people like Ana Mardoll who have replaced cable with a subtle combination of TV streaming services that they pay for, borrow, or trade in, the prospect of cracking down on password sharing is irritating.

“Look, everyone understands that everything costs more money these days. Server space, streaming fees, licenses; I don’t complain when Netflix raises the price,” Mardoll said. “But then they [Netflix] announced that they were leaving after sharing and I watched them make the same bad assumption that companies always make: that every ‘together’ household is a ‘lost sale.'”

Mardoll started saving huge sums of money by switching to streaming, but is now edging toward the cost of the size of a cable. He switched from expensive satellite TV to Netflix DVDs by mail, then added on Prime Video, Disney Plus, Hulu, and RiffTrax. He has been a paying Netflix subscriber since 2013, when a standard account cost $7.99 – now it’s $15.49. Mardoll shared the account with two other households that were unwilling or unable to pay for it themselves.

Other companies have been tight-lipped about their next move, but media industry experts predict they could follow Netflix’s lead.

“They think there’s endless growth, but when everyone hits the wall, they’re going to follow the same Netflix guidelines,” said Michael Nathanson, senior research analyst at MoffettNathanson, a New York-based independent research firm. “They will do the same.”

At launch, streaming companies focused on using those eyeballs — paid or not — to spread the word about new shows, Nathanson said. The more word of mouth there is, the more people will sign up to see what the fuss is all about.

Sharing is OK, until it’s not

It makes sense that sharing feels OK to a lot of people. Streaming companies have been giving winks and permissions to account sharing for years, if not outright pushing it.

Last September, Hulu’s official Twitter account said: “Our love language is sharing Hulu subscriptions.” Asked about the tweet, spokeswoman Kristie Adler described the account as a joke and said not all of the company’s social media posts were meant for literal interpretation.

In 2015, Richard Plepler, then CEO of HBO, said password sharing had no real effect on business: “What we do in this business is build addicts, build video addicts.” At CES 2016, Netflix CEO Reed Hastings said the company “loves” that people are sharing Netflix accounts and described it as “a positive thing, not a negative thing,” according to CNET.

Hulu, which is owned by Disney, said it had the technology to flag suspicious activity, but declined to provide specifics about what it qualifies or what enforcement it uses. Other companies have similarly unclear policies.

The lack of enforcement, by design, creates a culture of account sharing between close friends and family. It also leads to remote sharing between friends of friends, coworkers, ex and Airbnb guests and hosts.

Sara from New York has used the HBO Max login of a guy she met on a dating app and only dated once. He refused to use his last name for fear that he would change his password. Others borrowed streaming logins from a friend while recovering from surgery and continue to use them.

“At one point during the pandemic, we had the Criteria friend password,” said Riseley, the actor, who shares several of his own accounts with family members. “We watched two French films, then they disappeared. It was an interesting film to enjoy for a while.”

The risk of leaving after sharing

It’s not the urge to stay subscribed in the family that earned Ariane Broome-Hopkins – but the company that defines what family is based on primary address. “They can’t assume they understand the state of this person’s situation because of the metadata on their phone,” said Broome-Hopkins, a 36-year-old customer service officer. “Family is not as simple as it used to be.”

Broome-Hopkins’ partner lives in Austria, and he has close relatives and select family members scattered throughout the country and the world. For now, he’ll continue to share Apple TV Plus with his sister and partner, borrow Netflix from his best friend, and share Disney Plus with families with two kids who can’t afford it on their own.

The company already has tools in place to limit the overuse that can come with overused passwords. Some have limits on the number of streams that can be performed at a time, limits on the number of devices that can be logged in, and a number of defined profiles. Some companies will say whether they have enforced a division between people who know each other or if they plan to start.

While other streaming services have remained tight-lipped, Netflix has been very open about its strategy. As an example, Netflix uses IP addresses to determine what devices are connected to its service and from which locations. This is how the company knows that 100 million people are watching on other people’s accounts.

Streaming services may adhere to stricter rules or include more advertising options in hopes of getting more paying subscribers, but that can also drive people away.

“Netflix defaults. Available, easy to use, inexpensive. If something isn’t easy to use, if it’s not there, I’ve got another place,” says Adrienne Figus, a project manager at an academic library in Massachusetts, who once owned his own video rental shop. “Buy, borrow, library, pirated stuff – I can get it.”

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