And Here Comes The Backlash To Netflix Trying To Play Password Police

from the cash-cow dept

Karl Bode recently wrote about Netflix’s new password sharing policy, which mostly amounts to test-running an upcharge should Netflix discover that passwords are being used “outside the home” of the subscriber. While this pilot program is only going to be run in Chile, Costa Rica, and Peru, Netflix’s announcement was completely silent on how it’s going to track this sort of thing. Most assume it’s by IP or MAC addresses, though that obviously opens up a whole host of other questions. What about mobile devices? What about if you have a display at your workplace you want to stream to? What about VPNs? What about if you travel?

In other words, there is a ton of uncertainty here thanks to Netflix not bothering to share the “how” for its program. What was never uncertain, however, was that the public wasn’t going to like this new program.

“Netflix will lose a lot of customers if they do this password sharing crackdown they plan to do,” said one Twitter user.

“How do you expect families to handle password sharing in the case of divorcees, their children, or college students away from home?” another user said. “We already pay a lot for it, now you’re just milking us for every dollar spent.”

There is more where that came from. And, sure, it would be quite easy to look at all of this and see it as a bunch of people complaining about what has mostly been a multi-household password sharing habit. Through that lens, perhaps you might think that Netflix has every right to police passwords in this fashion. And, sure, it does. The question is whether the backlash is worth whatever income the company thinks it’s going to get out of this.

You will note, for instance, that Netflix isn’t going for a lockdown here. Instead, it’s attempting to get small time payments for sharing passwords. Those payment amounts were almost certainly designed to be in a sweet spot: too small to suddenly keep people from sharing their passwords at all, but big enough to bring in some significant income for Netflix.

Seen through that lens, Netflix actually wants password sharing to occur. Why? Because the company knows that those using shared passwords wouldn’t sign up for Netflix themselves if somehow password sharing was nixxed entirely. If Netflix believed that, then it would simply nix password sharing, rather than trying to turn it into a cashcow.

And that, I submit, the public will never like.

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Companies: netflix

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Comments on “And Here Comes The Backlash To Netflix Trying To Play Password Police”

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nerdrage says:

Re: Netflix isn't in trouble yet, but...

Netflix may have invented streaming but it doesn’t mean they’ll survive the vicious scrum. They have to battle Disney+ and HBO Max, with much bigger IP, and Amazon and Apple, which are just much bigger period. I think Netflix is looking down the road and realizing the fat & easy times are over and they really have to buckle down. This experiment is just the start.

I bet they run an experiment with an ad-supported tier next. Probably also in a lower-revenue country like Chile or Peru. That’s the biggest problem facing them: the most lucrative markets are getting tapped out. This may never come to the US at all, even if the experiment is a success.

Pixelation says:

Tempest in a teapot?

In the world of horrible things corporations do, this ranks down at the very bottom. At least in my mind.

If this were Comcast, we would get the …”Password management fee’, the “Password Sharing Fee’, the “Password as a Service” fee, and the “Password as a Luxury” fee. That would only be the beginning.

That One Guy (profile) says:

It is a strange problem that you want more of

I think it’s worthwhile to point out that one of the excuses for why they would be implementing this change is because they claimed they weren’t making ‘enough’ money, making it all the more clear that this is not intended to reduce password sharing they just want to tack on another fee for anyone who does so(or who they think is doing so).

Rather similar to internet connection ‘caps’ the goal isn’t to reduce the ‘problem’ it’s to profit from it, and if this doesn’t suffer a large enough pushback by customers it’s likely something that they’ll be rolling out wholesale in short order.

Anonymous Coward says:

Twitter rage

People upset about something on Twitter?! Get me my fainting couch! It’s not like you could find quality negative Twitter reactions for anything else announced by almost anyone ever.

Honestly, even the top quality quote included in the article is a bit amusing. I know this may come as a surprise to some, but if someone moves out (divorce, kids moving away to college, etc.) they aren’t part of the same household anymore. Strange, right? When you aren’t living together you…aren’t living together and some things that you shared before you generally now both need to pay for.

Now I really don’t care and if Netflix sees significant account cancellation as a result of the change they’ll either drop it or take the user number hit.

Anonymous Coward says:

Re: Re:

Is that really how it works with television and movies though? For the most part on the various video streaming platforms you are looking at either self produced content or exclusive licensing deals with limited content published to multiple platforms. Is someone really going to say, “I’m not going to watch [show/movie XXX] because I don’t have Netflix because 5 years ago my parents had to pay an extra $3 per month to keep me on their account when I moved out”? I might buy it for music where most of the services are completely interchangeable but that is not true for most TV / movie streaming providers (with the exception of things like Hulu Live and YoutubeTV that are effectively just TVoIP and which Netflix doesn’t compete).

Anonymous Coward says:

Re: Re: Re:

Is that really how it works with television and movies though?

I’m kind of curious, actually: are young people still watching movies? I had a friend who, when we were kids circa 1990, would inevitably get bored and run off before 30 minutes of any VHS tape had played. Today we’d call it ADD, and I don’t think it’s becoming any less prevalent.

Movies tend to demand a 90-to-120-minute block of uninterrupted time; even if one’s watching at higher-than-default speeds, it’s likely upwards of 45 minutes. I’ve heard of people who are constantly browsing stuff on their phones while watching movies at home. It’s not hard to imagine non-episodic long-form content falling out of favor as a result. (Probably not completely going away; but maybe people will be bitching about a funding crisis, as they’re already doing with respect to long-form journalism.)

Anonymous Coward says:

Re: Re:

Lose the student audience, and in future years you have also lost their children.

So, the same way cable’s failing, basically. Granted, Netflix still avoids many of the things that make people cringe when they see cable TV after being away from it (ads, including watermarks and other ads on top of the show being watched; schedules; lack of integration with TVs). But they have some of their own problems. Ever notice how hard Netflix promotes low-rated movies, while not integrating any way to check ratings? It’s rare to see movies rated less than 5/10 on IMDb, unless you’re looking up the videos suggested by Netflix, whereas the on-screen schedule of my parents’ cable service actually does show a star-rating (from an unidentifed data source).

Nevertheless, I can’t imagine many account cancellations will be directly traceable to this policy. It’s not like there’s a well-known competitor that’s much cheaper or has a better account-sharing policy. More likely, if it’s hard for students to share the accounts of their parents, they’ll learn to live without it (as my cohort learned to live without cable). The parents will keep subscribing, and perhaps be seen as out-of-touch for doing so; and Netflix et al. will be wondering where they went wrong, because they have few records showing people canceling for this reason. (And whatever the hip new competitor is, they’ll probably try to buy it.)

PaulT (profile) says:

“what has mostly been a multi-household password sharing habit”

Is it, though? I’d love to see the research for that and how they account for household where people regularly travel or are otherwise outside of their home location for long periods of time. At what point do you cease to become a “household”? How do you account for those people vs. those sharing the account with people who live elsewhere? How often does someone have to watch to be flagged as a shared user from a location?

As I mentioned in the previous thread, it’s way better that they try to add an extra charge to people who are genuinely sharing between large groups of people rather than try and shut everyone down. I’m just intrigued as to how they remove the many, many examples of false positives I can conceive of.

richardm0317 (profile) says:

Re: I doubt they will

If I had to guess I would say that NetFlix is not going to go crazy trying to hunt down all the non-sharers. The cost would most likely be more than any extra income they get.

They will add something to the bills or send out notices and a good percentage of users that are sharing between households will just pay the extra $3 and move on with their lives.

Twitter in particular and social media in general is very rarely a good representation of any group which in this case is NetFlix users. Plus are all those people whingeing on Twitter really going to cancel their accounts that they are sharing between multiple households over $3? I seriously doubt it.

nerdrage says:

Re: I bet Netflix knows a ton about its users

I had the same thought: how does Netflix distinguish business travel from vacation home from college kid using account from ex-gf/bf still using account from an actually stolen login?

They have behavioral and geographic info on all their viewers. They must have built profiles for identifying all those “use cases” and probably dozens more, to make pretty accurate guesses. There will be outliers of course but they can err on the side of caution, have customer service deal with mistakes, and use any feedback they get to refine their behavioral models.

In short: they are way ahead of us. This is all in some Powerpoint presentation sitting on Netflix’s office servers right now.

PaulT (profile) says:

Re: Re:

“They must have built profiles for identifying all those “use cases” and probably dozens more, to make pretty accurate guesses”

You’d hope so, but realistically what’s the difference between, say, a person who travels regularly for business to a fixed number of locations and stays with friends nearby who he does so, and the people who live in those houses using the account with a similar level of frequency because the guy shared the password with them? I can think of exactly zero information available to Netflix that would allow them to accurately make the distinction.

“In short: they are way ahead of us”

I very much doubt that. What’s more likely is that they’re using this current trial as a test for how much they can push it before people start cancelling, and treat the people falsely accused as collateral damage so long as revenue goes up.

Anonymous Coward says:


I doubt you’d generate a false positive. If you really do jump between the two connections with the same device they’ll likely see that you are the same household because some significant percentage of the time you are coming from the same “home” network (public IP address most likely). Then the same device (MAC address or, since you’re liking using their app, a Netflix installation or other device identifier; assuming such a thing exists), which also happens to be identified as running Android or iOS and is thus most likely a mobile device, accesses the account from a mobile data connection. Even if your mobile device never touches your home network they may not flag it simply because it is a mobile device using a mobile data network. All of the above is especially true if you are also using the same “profile” between the roaming device and another device in your “home”.

I expect the people who will have the most “false positives” would be ones who have unique devices at each location with members of the household exclusively using their profile “off site” for extended periods. For example, if the had a shared “family” profile you use while at home but your own profile that you only use away from home or someone who travels for extended periods (thinking on the order of a month at a time or more) and has a “travel” TV stick they use only away from home. Finding people who use it that way that aren’t really just password sharing I think is an exceedingly small percentage of the user base.

We don’t know for certain but I doubt the logic is as dumb as most people think. Netflix can already track how many people would be impacted by any algorithm they would choose to implement. If they are coming up with near 100% of users (which I believe is close to what they would get if they just used an IP address based system) they are likely not going to use it. Another thing to keep in mind is if they get it “right” (i.e. minimal false positives and the backlash is short lived as most people realize it doesn’t affect them) then it is likely going to be adopted by other providers in the not too distant future. I say that only because that is normally how these sort of extra fees work.

nerdrage says:

Re: dont worry

Unless you are very unusual in your behavior and geographic location, Netflix has already got your “use case” mapped out and categorized as one of say 50 different common behavioral patterns that either indicate that you’re a legit user or not.

Think of all the data all their viewers send back to Netflix. They haven’t been sitting idle all these years. They are mapping out patterns so they can understand the groups their viewers fall into in very detailed ways. One use for that data is to distinguish legit behavioral patterns from suspect ones, as defined by their TOS.

Rich says:

IP based geolocation is spotty at best

I really hope nobody is thinking about trying to use IP geolocation data for anything. My work has a range of static IPs that have not changed for nearly 10 years. Eight different IP Geolocation services have seven different locations in four different states. Of these services, only one has the correct city and state. What’s even more fun is that
Office365 servers seem to pick any of these at random, and will then send out security alerts about unlikely travel distances between logins. While I agree that it is indeed unlikely that I might travel from Mt. Laurel, New Jersey to Houston, Texas by way of Des Plaines, Illinois with a brief layover in Rockville, Maryland in a matter of minutes, the security fault might be in the data source.

Also, I just checked one of our other IPs in the same block, and I can now add Pennsylvania and Virginia to the list of states where I might be in another few minutes.

Much more likely they are just using all the sneaky device fingerprinting Javascript stuff that can uniquely identify damn near every possible attribute about your device, cross referenced to a couple of “anonymized” browsing data points, and they know exactly who you are.

From the github page:

“FingerprintJS is a browser fingerprinting library that queries browser attributes and computes a hashed visitor identifier from them. Unlike cookies and local storage, a fingerprint stays the same in incognito/private mode and even when browser data is purged.”

Ninja says:

Paraphrasing the king of Rohan: So it begins. Netflix has finally left the transition from cool startup with awesome products and ideas and stuck their foot firmly into Google/Oracle/etc and started to actively abuse their perceived dominant position. Except that position is being heavily attacked with varied degrees of success.

The backlash is already costing them. When they announced it I immediately downgraded my plan (even though my country was not affected) and the company secured the top spot of stuff I will cancel if my economic situation requires. And many in my circle are following this exact path.

The market has plenty of options now and there’s always piracy for Netflix exclusives. If one bothers with it because more and more people are going without just fine.

TaboToka (profile) says:

Re: No Doubt

When they announced it I immediately downgraded my plan (even though my country was not affected) and the company secured the top spot of stuff I will cancel if my economic situation requires. And many in my circle are following this exact path.

Ever since they raised the prices (I’m on the bottom tier) to what was almost the old middle tier, I reclassified them as “hanging on by a thread”.

For the most part, perhaps due to their algorithm, I’ve nearly run out of interesting things to watch. Most of what shows up on my feed is stuff I’ve already seen or stuff I’m just not interested in. The value just isn’t there.

Anonymous Coward says:


Let me keep stealing your service or I’ll leave!

How is it stealing when they explicitly allow multiple screens to watch content as part of their service plans.

Just because one screen is in my living room and the other is in my child’s dorm room in college shouldn’t mean that I am stealing from them.

I am using the service that I pay for as intended.

Ninja says:

Re: Re:

Some people seem to like how the US telcos devise creative ways to make you pay more times for the same service. Some sort of masochism I’d say. And I’m ok with that but companies should really just create a separate billing component called “masochistic consumer” and just let the customer define the value. I’m quite sure our bud above would choose to pay double for the same service. I’m not into S&M so I’d opt out.

nerdrage says:

this is only a test

Netflix is trying this as a test. They can see for themselves whether it results in more or less revenue.

I found it interesting that Chile and Peru are two test markets. These are among the least lucrative for Netflix because they can’t just charge people in countries like that $15/month like they do in the US and other high-income countries. Costa Rica is probably middle of the pack and might be there as a higher-revenue Latin American country to serve as a comparison.

The situation with Netflix right now is that they’ve tapped out growth in the US and their big growth now needs to be in much less wealthy countries. India is an extreme example of the problem. They had a mobile-only platform there for about $2.60 US dollars equivalent and even then they couldn’t get sign ups. They dropped it under $2.

In the meantime, they have to battle Disney+ and HBO Max, which can offer big-brand-name stuff based on Star Wars, DC, Marvel, Game of Thrones, renowned all over the world. They don’t have to spend billions randomly just to try to find their next hit.

Every time Disney+ makes a Star Wars or Marvel show, it’s a hit for them, even if it’s like Boba Fett and doesn’t really deserve to be a hit. That makes their spending far more efficient so they aren’t under as much financial pressure as Netflix. And they have all that merchandise they could start selling thru their streaming apps. The big money in Star Wars has always been merchandise, not movie tickets.

On the other side, there’s Amazon and Apple – tech behemoths that could buy up the whole competitive field or just outlast them. Netflix is going to be squeezed more and more in the future which is why it’s doing experiments to see if it can squeeze out another dime from existing subscribers. I expect an experiment with advertising to come along soon.

Al barker says:

Password usage warning

Netfix isn’t going for a lockdown approaching you sayings? Well that’s flat out wrong. It’s already happening in the UK

I was visiting my brothers house over over the New Year and used his smart TV for all of us to watch a Netflix show.

Tried again the next night and the sign in was disabled for his ISP, even when I fired up my own laptop. Only on my 4g phone was it allowed. And of course was working when I got home and was back on my ISP

Yea. Lest not pretend that it’s only a “proposal” by Netflix. It’s been happening for a while now.

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