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Netflix Cracks Down on Password Sharing to Stay at the Top of the Streaming Industry

  • Nadine Ghiran - SUBTA
  • Mar 17, 2021
  • 4 minute read

Netflix is testing out ways to decrease the number of passwords being shared to access its content. Certain customers recently received a new prompt on their screens reading, “If you don’t live with the owner of this account, you need your own account to keep watching.” Users had to verify the account via email or text code, or create an account with a 30-day free trial.

The coronavirus pandemic forced people to stay home and many turned to binge-watching their favorite shows and movies. Seeking to save money, those without an account chose to borrow one. More than 30% of consumers subscribing to streaming services like Netflix share their accounts with another household, according to research done by Magid.

Sharing Netflix passwords is notoriously popular, but it has become a bigger issue in the past couple of years. Netflix’s attempted prevention of account borrowing might directly impact its subscriber base and introduce a technology that could revolutionize the streaming industry.

Will Crack Downs on Password Sharing Bring in More Subscribers?

Netflix’s new account-verification policy could greatly increase its subscriber count, but it won’t happen overnight. Netflix’s strategy could cause unwanted churn at first, according to Yahoo Finance. However, the effort could bear fruit in the long run with people choosing to create their own accounts and develop brand loyalty. Experts say it’s unlikely that password borrowers will move to another streaming platform because of this new policy.  

Netflix is leading the streaming industry with more than 200 million subscribers and isn’t showing any signs of slowing down. The streaming giant gained nearly 16 million subscribers during the first three months of 2020 at the onset of the pandemic’s emergence in the United States.

Disney+ is already halfway to Netflix’s subscriber count, surpassing 100 million after its 16th month on the market. Netflix took 10 years to accomplish the same growth. Disney+ is projecting to reach 260 million subscribers by 2024, which would put it ahead of all other streaming platforms — including Netflix. 

Netflix’s new verification process could help the current leader stay ahead of the pack if password borrowers decide to create their own account and become paying subscribers.

The Streaming Industry’s Fight Against Password Sharing

Netflix, HBO, Amazon, and other companies discussed potential strategies to suppress password sharing in 2019. One tactic up for consideration required users to change their passwords regularly. Another would require subscribers to input a code that was texted to the account owner’s phone in order to keep watching. 

Password sharing wasn’t always the enemy. Back in 2014, HBO’s leadership noted that it wasn’t a fundamental problem… yet. In fact, CEO Richard Pleper thought it would help with brand exposure. He told BuzzFeed that password sharing “presents the brand to more and more people, and gives them an opportunity hopefully to become addicted to it.”

Seven years later, HBO is sharing its competitors’ feelings. Netflix, HBO, and Amazon are all a part of a group called the Alliance for Creativity and Entertainment, which works toward maximizing a consumer’s digital experience and limiting illegal acts of online piracy.

Until now, Netflix only patrolled simultaneous watching through its subscription plans:

  • The Basic plan is $8.99 a month and allows one screen to be streamed at a time. 
  • The Standard plan is $13.99 a month and allows for two screens to be streamed at the same time. 
  • Finally, the Premium plan is $17.99 a month and allows up to four screens to be streaming at the same time.

The new verification trial is “designed to help ensure that people using Netflix accounts are authorized to do so,” Netflix representatives told Yahoo Finance and Variety. With this new strategy, Netflix could acquire more customers, enabling the company to remain the leader of the streaming industry while generating revenue to produce more exclusive content like The Queen’s Gambit, The Crown, and Ozark.

Key Takeaways:

  • 33% of streaming subscribers share passwords with another household.
  • Netflix is testing a prompt to decrease the number of passwords being shared.
  • Preventing password sharing could result in involuntary churn at first, but ultimately increase the number of subscribers.

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