Netflix Starts Cracking Down On The Diabolical Menace Of Password Sharing

from the priorities-priorities dept

Back when Netflix was a pesky upstart trying to claw subscribers away from entrenched cable providers, the company had a pretty lax approach to users that shared streaming passwords. At one point CEO Reed Hastings went so far as to say he “loved” password sharing, seeing it as akin to free advertising. The idea was that as kids or friends got on more stable footing (left home to job hunt, whatever), they’d inevitably get hooked on the service and purchase their own subscription. Execs at HBO (at least before the AT&T acquisition) have stated it doesn’t really hurt these companies’ bottom lines in part because, much like with traditional piracy, there’s no guarantee these users would actually subscribe if they lost access.

In the last year or two, as Netflix’s dominance grew, the company’s position on the subject unsurprisingly started to toughen. And last week, the company began testing a system that would nudge password sharing subscribers to get their own account:

“…some viewers attempting to use somebody else’s account are now being stopped by a screen that says, “If you don’t live with the owner of this account, you need your own account to keep watching.”

Netflix confirmed the new feature, which is getting a limited rollout at this time. “This test is designed to help ensure that people using Netflix accounts are authorized to do so,” a Netflix spokesperson said. In order to continue watching, the viewer is given the option of either verifying their identity (with a texted or emailed code to the account’s owner), or opting to “verify later,” which gives the viewer an unspecified additional amount of time to continue watching and later confirm they are a valid account user.

Granted there’s a little tone deafness here, given the fact we’re in the middle of an historic health and economic crisis. But the shift was likely inevitable. A lot of Netflix’s initial, more consumer-friendly attitudes (like oh, the company’s support for net neutrality) have mysteriously disappeared as Netflix has shifted from pesky upstart to dominant player (Netflix had 203.67 million subscribers as of the end of 2020).

That said there is one plus side to the shift. As these users are shoved toward creating their own accounts, those users are being nudged to sign up for entirely new accounts with two-factor authentication:

“There seems to be a misunderstanding that sharing passwords with known individuals is not dangerous,? says Jake Moore, a cybersecurity specialist at security firm ESET. ?The truth is that we shouldn?t be sharing passwords, and adding multi-factor authentication will help this process remain better protected.?

Some of Netflix’s positional shift is courtesy of the traditional cable sector. Cable companies like Charter Spectrum (and its CEO Tom Rutledge) have spent years lamenting password sharing as the worst sort of villainy and a form of piracy (it’s very much not). Rutledge and his fellow band of password sharing pearl-clutchers have been cooking up an organization whose entire function is to apply pressure on streaming providers who’ve been lax on password sharing, since that is, as everybody knows, one of the very top issues facing America today.

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Companies: netflix

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Comments on “Netflix Starts Cracking Down On The Diabolical Menace Of Password Sharing”

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52 Comments
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Anonymous Coward says:

Re: To paraphrase Harvey Dent…

You either go out of business a heroic company…or see your enterprise eventually become the villainous market leader.

Which should speak volumes about the way we conduct business: As corrupt as possible.

You don’t go from being a company that makes an honest buck to one that fucks over society to stay profitable over night. It takes time for that mentality to seep in. Of course we also have a country full of idiots who care nothing for their fellow countrymen let alone fellow humans. Money is all that matters to them, and they will tear down and demonize any barrier to them making more of it. US society is just garbage in this regard. Can’t say I’m surprised Netflix turned out this way, I’m more surprised they are allowing the user to postpone verification at all. (I’m dead certain the more corrupt individuals within Netflix pushing this policy are demanding this.)

nerdrage (profile) says:

Re: Re: To paraphrase Harvey Dent…

If you define being greedy and profit-driven as "corrupt," then I hate to break it to ya: all corporations are corrupt. Stop giving them money if this bothers you. Make your own clothes, grow your own crops. You want "corrupt," the clothing and agriculture industries are two of the most abusive around. Netflix is a fluffy bunny compared with them. And don’t get me started on big pharma. Better make your own medicines too.

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The Smilin' Starduster (Slim Whitman) says:

Re: So, okay if I share "Bloof's" or "PaulT's&quo

Bet though, that Techdirt and fanboys have some sort of proprietary notion that it’s "their" account, even though haven’t paid anything for them.

Highly selective "ownership" culture here at TD. It’s okay to "share" Netflix passwords, but one to this tiny little site? Not on your Natalie!


BTW: I borrow screen name only to pay tribute to great old guy.

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PaulT (profile) says:

Re: Re: Re: So, okay if I share "Bloof's" or &

No, it proves that after a decade raging about them, you still haven’t learned the basics of how spam filters work. Nor that the answer to being correctly labelled a spammer is not to submit more spam.

Next time, stop with masturbatory fantasies about people here and read up on basic facts? You’ll get more said that way.

Samuel Abram (profile) says:

Re: Re: So, okay if I share "Bloof's" or "PaulT's

Did it ever occur to you that there are situations such as one may have an immediate family member that lives in a different city and that’s why their password is being shared? And there are more like those.

But I guess I wouldn’t expect someone like you to understand.

nasch (profile) says:

Re: Re: Re:3 So, okay if I share "Bloof's" or &

So, I’m at work in Gibraltar while my flatmate remains in Spain and my girlfriend is in the UK. They’re all authorised to use the account by the definition you just described.

If that’s a temporary arrangement perhaps. If your girlfriend lives in the UK and you live in Spain, that is not the same household.

PaulT (profile) says:

Re: Re: Re:4 So, okay if I share "Bloof's"

Or, to put it another way – I have a friend whose mother lives with him as a legal Spanish resident for over 180 days per year, which is what’s required for that to be her permanent residence and therefore part of the same household. However, she works as a live-in carer in the UK, which means that she’s away for 6 -8 weeks at a time normally (slightly more this last year with COVID travel restrictions and regular flight cancellations, but legally that’s still true).

At which point is Netflix going to decide that she shouldn’t be able to access the account she helps pay for? That’s the real question. Not everyone has a standard working or living arrangement where everyone sleeps in the same house every night even though that’s where they live. So, where are the limits?

PaulT (profile) says:

Re: Re: Re:6 So, okay if I share "Bloof'

Why would 2FA prevent deliberate password sharing?

Remember, this is not supposedly about people using an account owner’s password without their knowledge, it’s supposed to be about stopping the account owner agreeing to share with people outside of their household. With 2FA, the account owner can just authorise whoever he has an agreement with as he could before this became an issue.

So, how do you determine the household and who should be allowed to use the account when members of that household regularly travel beyond their household?

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Stephen T. Stone (profile) says:

Re:

They could be generous, or I could "hack" them

You sure you wanna put your ass out there like that, Brainy? I mean, this site has ripped on the CFAA before, but I’m sure Mike would make an exception for using it against an ignorant motherfucker like you.

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PaulT (profile) says:

Re: So, okay if I share "Bloof's" or "PaulT's" account here?

Go ahead, although I can happily revoke your access to the account, and ensure that you get the full force of punishment you deserve for the felony you just committed.

Although, it’s always funny to see the fantasy you have about me differ so completely from reality. Not only are you fundamentally unable to deal with the real world, you’re a terrible fiction writer.

Anonymous Coward says:

That said there is one plus side to the shift. As these users are shoved toward creating their own accounts, those users are being nudged to sign up for entirely new accounts with two-factor authentication

Do you mean "plus side for Netflix’s profits"? I can’t see what that would have to do with two-factor authentication, nor do I see how such authentication would be a "plus side" for users. I doubt many of them are clamoring to be protected from… someone else watching TV?

Anonymous Coward says:

Password Sharing Is Kind Of A Pain Anyway

Don’t get me wrong, the vilification of sharing access to a streaming account is way overblown but maybe this is an opportunity? It probably won’t be Netflix to crack this nut but having bundled logins under one master account would be a great feature to tote around. Spotify is pretty good for this but the terms/conditions are surprisingly confusing.

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Rico R. (profile) says:

Don’t forget that Netflix is also now a part of the MPAA. Maybe that could have something to do with this crackdown? After all, many other members are against password sharing. And that’s not to mention that they want everyone to never pirate and pay for every movie they want to own and every single streaming service that has something they want to watch. And pay for their Internet connection to watch said streaming sites. And their phone bill. And their electricity. And their water bill. And their rent. And groceries. And anything else they need to support a family. And probably more. And put some money in savings. And have an in case of an immediate emergency fund. And pay for gifts and other things they might want to buy. All while working a minimum wage job.

Tell me: Who has the ability to pay for all that under those circumstances? That’s why piracy exists. Not because they’re too lazy to go to the store. Not because they don’t want to support the filmmakers/artists/creators of the content they consume. And not because they just want to get content for free. It’s because if there was no piracy, they wouldn’t consume the content at all. Period. So maybe ask them if they would rather have those who share passwords move over to a torrent site instead, and see how quickly they change their views.

nerdrage (profile) says:

Re: this has nothing to do with the MPAA

I know why this happened. Some minion at Netflix thought "hey I can look good to the boss by squeezing a little more profit out of subscribers." Netflix runs tests like this all the time. They tested their shuffle feature, found that it was successful and rolled it out to the whole subscriber base. Now they’re cracking down on pw sharing as a test.

They can see if they are making more or less money with the test group compared with the control group. Depending on the results, they will roll it out or cancel it entirely. I bet it works and they roll it out to the whole population, and the person who thought of it gets a raise or maybe just to keep their job. Netflix is notorious for being rough on employees who don’t perform.

"It’s because if there was no piracy, they wouldn’t consume the content at all."

Nope. It’s been well documented that pirates are heavier-than-average media consumers, including paying for Netflix, Disney etc. If they couldn’t pirate media, they wouldn’t stop paying for what they already pay for (why would they?) and possibly pay for more. Why not crack down and see if you can get them to pay for more?

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Rekrul says:

Most companies follow the same path. They start out as a friendly, customer oriented business, but as they grow, they become more impersonal and more focused on squeezing every last cent out of of their customers.

People today may find this hard to believe, but there was a time when Electronic Arts would send a personal reply to letters, answering their questions. And at one point, you could actually email a real, live human at Google, back before they turned the operation of the company completely over to A.I. routines.

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Stephen T. Stone (profile) says:

Re:

The change is largely due to one factor: shareholders. Before a company goes public, it has to worry more about pleasing customers. After it goes public, it has to worry more about pleasing shareholders — which often means trying to make all the money, then trying to make even more after that.

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PaulT (profile) says:

Re: Re: Re:

Exactly. The problem is that Netflix will have essentially reached a point of growth that is naturally going to slow down. Shareholders will be getting fidgety about the number of large expensive productions being produced, and the increased competition from the likes of Disney+. They will also be demanding further growth regardless.

I doubt that doing this would have the desired effect, and could in fact backfire severely if they’re not careful, but it’s an easy sell to shareholders in the short term.

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nerdrage (profile) says:

Re: Re: Re: pw sharing is trivial

Compared with the bigger issues Netflix faces, I don’t see pw sharing as being a very important factor. More of a side experiment Netflix is running to see if they can squeeze a little more profit out of subscribers.

But the big issues revolve around competition and expansion. Disney can wield big brands like Star Wars and Marvel while Netflix doesn’t have that option, how big of a problem is that for them in the future? What about markets like India where ARPU is rock bottom, how do they deal with markets like that?

PaulT (profile) says:

Re: Re: Re:2 pw sharing is trivial

"Compared with the bigger issues Netflix faces, I don’t see pw sharing as being a very important factor"

It’s not, it’s just something that can easily be sold to bean counters as something to look at while they deal with more fundamental issues. The question is whether or not it backfires – people who get kicked off aren’t necessarily going to sign up for a new account, while account holders who are left might just decide they don’t watch enough to continue subscribing, or at least downgrade to cheaper accounts now they no longer need so many active screens. So, they could lose a significant amount of revenue if this is not done right.

As for the other questions – Netflix essentially built this distribution model, and their move into buying and producing original content was a direct response to studios tying to extort them for play back catalogue content. We’re now dealing with a different model altogether, where competitors are shifting theatrical new releases to streaming services, while there’s also a large number of successful niche services popping up. We’ll see how everybody reacts, but the only sure thing is that Netflix will no longer have a default position of dominance.

Anonymous Coward says:

Re: Re: Re:3 pw sharing is trivial

The question is whether or not it backfires –

If thy stop students away at school sharing their parents account, the risk is that they lose that audience to YouTube and other free video streaming services. Once they form an online viewing habit, it will be hard to change their choices.

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Scary Devil Monastery (profile) says:

Re: Re: Re:

"After it goes public, it has to worry more about pleasing shareholders — which often means trying to make all the money, then trying to make even more after that."

There were a lot of people who laughed at Ingvar Kamprad’s IKEA and his insistence to always maintain full control. Not publicly trading a company? Absurd.

And yet it would have been utterly impossible for that company to grow into what it’s become if it had to cater to the whimes of stockholders – who are no more invested in the company as anything other than a cash cow.

nerdrage (profile) says:

Re: Re: not so much

I’ve worked for companies pre-IPO and they act just as greedy before the IPO as after. People don’t found companies as charities unless it’s planned to be a nonprofit all along.

Pre-IPO, the focus is on pleasing the initial investors and launching a successful IPO to pay them off. Private or public, corporations always have investors who provide funds with an eye towards profit. The IPO just opens the investment up to a larger group of greedy shareholders.

I doubt that there was any time in Netflix’s history when they were materially less greedy and profit-focused than they are right now.

Stephen T. Stone (profile) says:

Re: Re: Re:

You’ll find no argument from me on that point. But by and large, non-publicly traded companies tend to worry more about customer experience (and thus keeping them happy) than about a “profits above all else” ethos. Once a company becomes publicly traded, profits become the one and only concern — even above keeping customers.

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Ted the IT Guy (profile) says:

Well, this should be fun...

I pay Netflix for extra streams so each of my family members are able to watch wherever they are. We all live at the main address, but we do get around.

Any one of us could be watching Netflix:

  • At home
  • At a hotel
  • At university
  • On our phone, anywhere
  • On our laptop, anywhere
  • On a "travel" Roku, anywhere
  • On a friend/family Smart TV while we are visiting

To me, these all seem like reasonable use cases for "sharing" to me – nobody outside the family has the password, but any of us could be in locations away from our home at any time.

If I’m in Manilla and my wife gets locked out of Netflix at her sister’s house three doors down, I’ll be more than a little annoyed.

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PaulT (profile) says:

Re: Well, this should be fun...

Yep, it depends on how they detect the "sharing", but if all they’re doing is looking at people accessing from different locations then they’re not cracking down on sharing, they’re preventing the account holder from doing what they explicitly pay for.

nerdrage (profile) says:

what's the big deal?

Netflix is just running an experiment to see if cracking down on pw sharing makes them more money than it loses. Depending on how this turns out, they will continue it or not.

It’s cute seeing people rage about how "corrupt" this is. This is just business as usual and Netflix has never been non-corrupt in this regards. It has always been a greedy, profit-hungry corporation just like all the rest of them.

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