Netflix Is Still Trying To Figure Out How To Charge For Password Sharing

There was a time when Netflix had the whole pie to itself when it came to television and movie-streaming market share, but viable offerings from companies like Amazon, Disney, Apple, and Warner Bros Discovery have forced the service to rethink its business plan. The company is continuing to experiment with ways to crack down on password sharing in its Latin American market, Bloomberg reports.

Limited Use is OK

Netflix is going to ask users in Argentina, El Salvador, Guatemala, Honduras, and the Dominican Republic to pay an extra fee if they want to use an account for more than two weeks outside of their primary residence. This is meant to deter long-term password sharing while still making allowances for things like vacations.

In these areas, you'll have a primary residence where you can access Netflix across all your devices. If you want to use your Netflix account at a secondary residence, Netflix is asking you to pay the equivalent of about $1.70 in Argentina and $2.99 in the other countries. Depending on your plan you can add more additional homes; one on the Basic plan, two on the Standard plan, and three on Premium. Bloomberg says that this won't affect users on smartphones, tablets, or laptops, but the main problem still exists: how does Netflix decide what constitutes a household?

What is a 'household?'

Netflix began testing this back in March, focusing on Chile, Peru, and Costa Rica. For that test, Netflix allowed users to add "subaccounts" to an existing account for the equivalent of around $2-3 USD. Rest of World (via The Verge) noted in May, though, that subscribers were unsure of Netflix's definition of a household (while other users found ways around the prompt entirely).

For example, if mobile devices remain unaffected, is Netflix making that decision based on the device being connected to the carrier directly, or does that include using WiFi as well? If someone takes their laptop back and forth between two homes, are those two households? If being on a mobile device is an automatic pass, how does Netflix determine you're on a mobile device?

100 million households are using shared passwords

This is big business. Bloomberg notes that more than 100 million households are using accounts paid for by other people, and pointed to password sharing as a reason for its slowing growth and for its first reported loss of customers in almost ten years in Q1 2022. The company's share price dropped by almost 70% this year as a result. The company says that password sharing has been particularly high in Latin America, hence testing these initiatives there first.

The company is trying to strike a balance between getting those password sharers to cough up at least a few dollars without also alienating paying users at the same time. The company also hopes to ease the transition with an account transfer tool that allows you to transfer your user profile--recommendations, watch history, and My List--to one of those subaccounts or to an entirely new account.

While some users will certainly embrace this model, others will choose dropping the service over paying more. To offer another possible avenue, Netflix has been exploring an ad-supported tier of streaming and recently partnered with Microsoft to make those ads happen. Right now, Netflix has not announced any specific plans to bring its password-sharing limitations to other territories, but it's almost a certainty once the streamer irons out the kinks.