Hot Take: Netflix Password Sharing

Ever since Netflix announced that it would crack down on password sharing, we’ve been curious how it would turn out. After all, who doesn’t share their streaming service passwords with someone outside their household? Well, so far, Netflix’s trial run in some of its smallest markets—Chile, Costa Rica, and Peru—isn’t going so well.¹

In those countries, which are some of Netflix’s smallest markets, the streaming company has been offering users the ability to share passwords with two customers living outside the home for the equivalent of around $2 a month. Apparently, the test policy has resulted in more confusion than revenue.

Netflix’s shrinking subscriber base and stock prices prompted the changes. Analysts projected that, by charging the fee, Netflix could make up to $1.6 billion. But some customers in the test markets have either canceled their subs, ignored the new policy, or argued with Netflix over what qualifies as a household.

Since this is the first test of the new password-sharing policy, and a small one at that, don’t think that Netflix will give up on it yet. Especially since it could provide a much-needed infusion of cash. But it will be interesting to see how the policy evolves as Netflix tests it in larger markets.

If Netflix succeeds in monetizing password sharing, other services will follow suit. So it’s probably smarter to roll these costs into the plan prices instead of openly charging users for sharing login credentials. After all, password-sharing isn’t a new feature. In fact, Netflix users probably see it as something they’ve been paying for all along and are unlikely to give it up without some resistance.

Endnote

1. Geoffrey Morrison, Next TV, “Netflix’s Password-Sharing Crackdown Is Already a Mess,” May 31, 2022. Accessed June 2, 2022.