Netflix finally leftshocked the world this week by announcing that it is finally cracking down on the common practice of sharing passwords.
Netflix finally left the video streamer doesn’t plan to freeze those shared accounts. Instead, companies will likely prefer to charge extra for funds used by many people outside the home.
Netflix’s plan to catch this lost revenue begins by sending a signal to account holders whose passwords are used by other households.
The company has testing this feature in Peru, Costa Rica, and Chile. For accounts that share passwords between addresses, Netflix charges an additional fee for adding “sub-accounts” for up to two people who aren’t home. Based on current exchange rates. Prices vary by country – around $2.13 per month in Peru, $2.99 in Costa Rica, ALSO $2.92 in Chile.
The company also allows people who share passwords to transfer their personal account information to a new account or profile, saving their viewing history and recommendations.
“If you have a sister, let’s say she lives in another city, you want to share Netflix with her. Which is great,” Chief Operating Officer Greg Peters said during the company’s earnings call. “We are not trying to stop this sharing, but we will ask you to pay less to share with him so that he can benefit and appreciate the service. But we will also receive revenue from this advertising.”
Netflix hasn’t said how much revenue it expects from implementing its global sharing strategy.
However, Peters said it would take about a year to roll out sub-account pricing globally. A study by research organization Time2Play shows that about 80% of Americans. Who use someone else’s password don’t get their new account if they can’t share the password. It doesn’t check how many current account payers are willing to pay more to share with others.
Peters also suggested that the company could still change prices or revise its testing strategy.
“It takes time to understand this and find the right balance,” he said. “So, just to set your expectations, I’m sure that we will repeat it for about a year and then implement all of this to roll out this solution globally. Including in markets like the United States.
Netflix’s plans are unprecedented. No prominent streamer has ever shared passwords. Owners of other streaming services like Disney, Warner Bros., Discovery. Comcast’s NBCUniversal, and Paramount Global likely won’t come up with plans until they review Netflix’s password-sharing reforms.