By: Rosie Townsley, Associate Editor

In 2017, Netflix tweeted “Love is sharing a password.” Flash-forward six years, it seems that the company’s view on password sharing is no longer shaded with optimism, as the streaming site announced its decision to more strictly enforce keeping accounts contained within households. In February 2023, Netflix reported that of its 231 million worldwide subscriptions, over 100 million accounts are shared outside of the intended household. Netflix’s Help Center defines a “household” as the “people who live in the same location with the account owner.” This policy shift has put a significant number of Netflix users on edge, ranging from college students using their parent’s account, habitual travelers accessing their subscription in a number of locations, and co-parenting families with members splitting time between two places. The question now posed is what exactly would this new policy entail?

Netflix reasons that cracking down on password sharing will help bump profits. After experiencing a surge in streaming subscriptions in the wake of the COVID-19 pandemic, Netflix suffered a shock in 2022 when it surprisingly lost subscribers for the first time in over a decade. In response, the streaming giant notified shareholders of its decision to crack down on password sharing in 2023, with plans set to go into effect by the end of March. These plans range from giving viewers who are using another person’s account the chance to transfer their existing profile to their own account; allowing subscribers to elect to continue sharing their account with an additional charge for “sub-accounts” of extra members; and sending a verification code to the primary contact on the account, which would need to be acted on within 15-minutes to grant account access. With the information provided by IP addresses, device IDs, and individual account activity, Netflix has enough data to discern whether accounts are following the rules.

Netflix grounds its decision pursuant to the language contained within its Terms of Use. The Terms state that the service and content Netflix provides “may not be shared with individuals beyond your household, unless otherwise allowed by your subscription plan.” Based on the streaming site’s definition, it appears that sharing a password with people outside of one’s household amounts to a breach of contract, which could technically be pursued by Netflix in a court of law or by terminating account access for violators. However, at this time Netflix has never pursued such a claim, nor has the company made any threats to do so in the future.

Viewed on the international scale, the U.S. does not clearly state that password sharing is against the law, but the U.K. takes a firmer stance on the issue. According to the United Kingdom’s Intellectual Property Office (“IPO”), password-sharers that intend to “allow a user access to copyright-protected works without payment” could face both civil and criminal liability. The Crown Prosecution Service (“CPS”) spoke on the idea of criminal prosecution, stating that any potential charges for password sharing would be analyzed on a “case-by-case basis.” Although this punishment sounds daunting, there is no evidence that U.K. police forces would initiate an investigation into someone for sharing their password to Netflix, which is a necessary step to bring criminal charges before the CPS.

Whether Netflix actually implements the suggested changes will only be proven with time. However, in trying to boost its bottom line, Netflix runs the risk of costing the company its most valuable asset of all: subscribers. The streaming site cannot afford to forget how much leverage customers have by simply walking away in response to rising costs. Considering how much of an uproar the mere mention of Netflix’s potential crackdown caused, the company has made itself the test subject for stricter password sharing on streaming sites. How Netflix fares with this experiment could change the company’s overall dynamic and influence whether other streaming platforms intend to follow suit.

 

Works Cited:

https://www.nme.com/news/tv/netflix-ridiculed-over-resurfaced-sharing-password-tweet-3392067 https://help.netflix.com/legal/termsofuse https://time.com/6251148/netflix-password-sharing-crackdown-rules/ https://www.cnbc.com/2023/03/08/netflix-password-sharing-crackdown-college-students.html https://blog.charlesrussellspeechlys.com/post/102i5vc/is-it-really-against-the-law-to-share-your-netflix-password https://www.bbc.com/news/technology-64003237