After years of allowing users to share their passwords with family and friends, Netflix is now testing a new method to crack down on the practice. The streaming company is reportedly planning to charge account holders a small fee if they are caught sharing passwords with people outside of their households.
The additional fees, which will reportedly be implemented "over the next few weeks," are meant to discourage users from the practice. Sources familiar with the matter said Netflix would first be rolling out the additional charges to users in Chile, Costa Rica, and Peru first before implementing it worldwide.
In an announcement published Thursday, Netflix told users in the three countries that they will be charged $2 to $3 for each "sub-account." This applies to users logging in to the account who do not live in the main account holder's household. Netflix said it would be "working to understand" the effectiveness of the new system before it makes any changes in other countries.
Sub users will be able to transfer their profile information once their "Extra Member" accounts. Netflix said the new feature should give users more flexibility in terms of how they want to share their subscriptions and with whom.
Netflix's director of product innovation, Chengyi Long, said the company has always worked to make it easy for users to share their accounts with the people they live with. However, Long added that there may have been some confusion in how users are sharing their accounts, and the practice of sharing passwords with other people outside their households is negatively impacting the company's ability to generate better content.
Within the aforementioned three countries, users who have given their passwords to people outside their households will be sent an email notification informing them of the new payment options. Users will also be required to verify their accounts if they log in on a device that is outside their household.
Netflix began displaying warnings to certain customers who borrowed login credentials around a year ago. The company sent warnings to users who didn't live with the owner of an account that they needed to open up their own accounts. Despite the warnings, users outside of an account holder's household were still allowed to continue using its service.
Last year, Netflix reported $30 billion in revenue and $6.2 billion in operating profits, reflecting a 19% and 35% year-over-year increase, respectively. In Q4 2021, Netflix added 8.3 million paying subscribers, increasing the total to 222 million across 190 countries. In the United States, monthly streaming options run from $9.99 to $19.99.