Netflix Starts Cracking Down Harder On Password Sharing

from the meet-the-new-boss 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 who 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.

But as Netflix subscription numbers have begun to go south and competitors are challenging Netflix’s market share and revenue, the company is predictably taking a harder stance on the practice.

In a blog post, Netflix director of product innovation Chengyi Long explained that the company is conducting a new test that will impose additional fees on an account holder if Netflix can see that the account is being used outside of the account owner’s home. The trial is initially only being conducted in Chile, Costa Rica, and Peru, and is, predictably, framed by Netflix as an innovative change:

…accounts are being shared between households – impacting our ability to invest in great new TV and films for our members. So for the last year we’ve been working on ways to enable members who share outside their household to do so easily and securely, while also paying a bit more. 

Basically, original account holders whose passwords are being shared outside of the home will pay 2,380 CLP in Chile, $2.99 USD in Costa Rica, and 7.9 PEN in Peru per each user. Netflix is also creating systems that will make it easier for password sharing users to migrate their shared account to a new subscription.

Netflix doesn’t state how it’s determining whether a password user lives in the house. Presumably it’s by IP addresses, MAC IDs, or some other identifying metric. So it’s not yet clear whether this is something that can be bypassed by utilizing a VPN or other IP address masking technology.

Again though, executives have, for years, noted that password sharing isn’t actually a big deal. Execs at HBO (at least before the AT&T acquisition) repeatedly noted that 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.

Most streaming services already impose limits to how many streams can be running simultaneously under one account anyway, forcing you to pay more money for accounts with greater simultaneous streaming limitations. So it’s not like passwords could be shared with an unlimited number of followers, or this was having a profound impact on Netflix’s bottom line — already buoyed by a recent price hike.

But as competition gets more heated in the streaming space it’s both hurting market share and forcing companies to spend top dollar for content creation. So companies like Netflix, well out of the honeymoon stage, are now going to be looking to wring more money from each existing subscriber in any way possible, a trend that’s only going to accelerate.

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Companies: netflix

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Comments on “Netflix Starts Cracking Down Harder On Password Sharing”

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btr1701 (profile) says:

Netflix doesn’t state how it’s determining whether
a password user lives in the house. Presumably
it’s by IP addresses, MAC IDs, or some other
identifying metric.

Or whether this system will decide someone who travels a lot for business and watches Netflix on hotel room TVs through their account will be flagged as being a ‘password sharer’.

Anonymous Coward says:

Re:

The are some pretty easy ways to not be completely dumb on it. A relatively simple idea is by looking at simultaneous or near simultaneous access from multiple different but consistent IPs or geographic locations over an extended period. Looking at which “user” is selected from each location or IP address would make it even easier. If you are accessing it from a new site for a week and select your normal profile but then you go back to your normal location they are not likely to flag you. On the other hand if they see two different IPs accessing content repeatedly and each one is consistently selecting different users then I expect you might get an email about it. It isn’t rocket surgery to capture a significant portion of sharers without affecting almost anyone else.

PaulT (profile) says:

Re: Re:

“A relatively simple idea is by looking at simultaneous or near simultaneous access from multiple different but consistent IPs or geographic locations over an extended period”

So, when my friend who works as a live-in carer where she stays at the patient’s home for several months of the year, she’s out of luck if her husband and her both wish to use the account they pay for?

“If you are accessing it from a new site for a week and select your normal profile but then you go back to your normal location they are not likely to flag you”

So, you’re screwed if you don’t really use it at home, but like to have it running while you’re working quiet night shifts?

“On the other hand if they see two different IPs accessing content repeatedly and each one is consistently selecting different users then I expect you might get an email about it”

So, it’s easy to game if you’re careful about who uses which profile, but someone who has different recommendation profiles is screwed (I know a couple of podcasters who do this so that the stuff they watch for shows don’t get messed up by the stuff they watch for the shows).

This is the problem – for every “obvious” indication of abuse, there’s plenty of people who use the account in that way legitimately. The further they try to “enforce” this under the current rules (you pay for X number of devices with no stated restrictions as to what or where the devices are), the more they screw people using the service they pay for.

“It isn’t rocket surgery to capture a significant portion of sharers without affecting almost anyone else.”

No, it’s impossible to do anything without catching a bunch of people who aren’t abusing the system. They might not be mainstream users, but it’s a lot of people given the huge subscriber base they have. Especially when you take into account the fact that a lot of people travel extensively, and there’s many places in the world where you might not even work in the same country where you live, let alone the same city (I spent 12 years crossing an international border to go to work, for example).

This comment has been deemed insightful by the community.
PaulT (profile) says:

Re:

Yes, this is my major problem with “cracking down” on stuff like this – there’s ultimately no way to accurately determine who’s doing what. If I’m sitting at work in one location, my partner is in another location and other members of the household are at home, that’s not sharing with anyone, that’s the people of the household that the account is paid for using the account according to the rules of the account. Even if we all happen to be in different countries at the time, my using my account outside of my home address is not indication that I’m allowing anyone else to use it. The fact that I might use devices other than the ones I personally own does not indicate that I’m letting anyone else use it.

I mean, sure, I can understand why they might want to crack down on people sharing their account with 20 other people, but so long as I’m paying for simultaneous access to 4 devices from my account, I don’t see how it’s possible for Netflix to tell the difference between “password sharing” and a household that actively uses it while travelling, commuting or otherwise not at their home address – and using Netflix while doing those things is a big selling point for paying to use it in the first place.

This comment has been deemed insightful by the community.
William Null says:

If they lose access, they will just go to a pirate site. Because seeing that they password share, they are likely to either be unable to afford or downright don’t want to pay for access. And fees for the account holder may even drive them to unsubscribe themselves.

Honestly, I have yet to see a pirate streaming site that doesn’t have Netflix’s stuff.

This comment has been deemed insightful by the community.
PaulT (profile) says:

“So for the last year we’ve been working on ways to enable members who share outside their household to do so easily and securely, while also paying a bit more. ”

It’s cool that they seem to be just using this as an excuse to add a surcharge, and not to start blocking people who don’t fit a faulty set of assumptions as to how “real” customers are using it. But, I fear that a lot of legit users are going to be hit with charges because they don’t take into account a lot of real life use cases.

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