Last week, Netflix announced it’s finally implementing its long-discussed password sharing crackdown. Accounts will be limited in the United States to those who live in the same household. Netflix will charge an additional $8 a month on top of the Standard or Premium plan price ($15.50 or $20 a month respectively) for anyone not living in the same household, but using an account. The Standard With Ads $7/month Netflix tier and the $10/month ad-free Basic tier aren’t eligible. There’s also other restrictions on non-household users (listed here).
Downsides of the password sharing crackdown
So far, reaction to this has been mostly negative. I understand Netflix needs to make money as a business. Also, as I’ve noted before, Netflix doesn’t really have any other assets, unlike its rivals at Disney, Warner Bros., etc. Still, this approach leaves much to be desired. Never mind the difficulty in asking people to pay for something Netflix looked the other way on or all but encouraged for years:
There’s also, of course, seeing people explain to relatives, friends, and students away at college why they’re being cut off if they opt out of paying for this.
If it were $1 or $2 a month to share a Netflix account, I think people would still grumble, but go along with it, treating it as just another one of Netflix’s price hikes. The same might be the case even if Netflix slowly raised that amount over time. But going straight in at charging $8 on top of an already-pricey Netflix subscription looks greedy, and is likely a non-starter for many customers. Netflix lost a million customers in Spain after implementing a similar fee/password crackdown.
There’s also been confusion over how Netflix will determine non-household users, especially for those traveling frequently or various specific usage cases. Apparently, users will need to log in with their device to the main account at least once a month.
Alternatives to Netflix’s password sharing fee
The $8 price point could be a way to encourage password borrowers to sign up for their own Netflix account, at the ad-based tier (at $1 less), given the lucrativeness of ads. Unfortunately for Netflix, the price point also runs up against what other streaming services cost.
Rival services that cost less than or the same amount as Netflix’s $8 fee:
- PBS Passport (monthly donation, without ads): $5
- Peacock (with ads): $5
- Discovery+: $5 (with ads) / $7 (without ads)
- Paramount+ (with ads): $6
- Apple TV+ (without ads): $7
- Hulu (with ads): $8
- Tubi, Pluto TV, Freevee (all with ads): free
Basically, nearly all of Netflix’s major competitors. Netflix password borrowers who aren’t inclined to pay for their own account (or ask the account holder to pay the $8 fee) might opt to switch to a rival service instead.
Of course, some Netflix subscribers might not keep too close tabs on their monthly bank/credit card statements (or the email Netflix sent warning users about all of this), and just pay the sharing fee anyway. There’s also those that don’t want to cut off their relatives or friends, and are also willing to pay. And of course, there’s the concern that if Netflix’s fee is successful, other services (Hulu, Disney+, Max, etc.) could implement similar fees.
Still, I wonder if Netflix overestimated how attached password borrowers (and possibly customers) are to its streaming service. Unlike a decade ago, Netflix doesn’t exactly have a near-monopoly on streaming anymore. And again, charging $8 (instead of a few dollars, which might’ve been a “no-brainer”) might give customers a reason to reconsider keeping Netflix.