Netflix

Netflix, the American streaming giant, is expected to make significant efforts to limit the sharing of passwords between users next year, as it fights to retain and increase subscriptions in the face of stiff competition from similar services.

Earlier this year, the company saw the first drop in subscriber numbers in over 10 years, as Disney+, HBO Max and Paramount+ drew in viewers.

While the issue of password sharing was first acknowledged in 2019, the onset of the COVID-19 pandemic and the rush of new subscribers as people were forced to adjust to life in lockdown led the company to put the matter on the backburner.

According to the Wall Street Journal, Netflix co-chief executive Reed Hastings told a gathering of senior executives earlier this year that the pandemic boom had masked the extent of the password-sharing issue, and that they had waited too long to deal with it.

With more than 100 million Netflix viewers watching the service using passwords they borrow, typically from family and friends, the company is seeing this is a key source of growth in the near and medium term.

The company expects to begin rolling out the change in the US early in the year, though this is not without risk.

“Make no mistake, I don’t think consumers are going to love it right out of the gate,” Netflix co-CEO Ted Sarandos told investors in early December, adding it was up to the company to make sure users see value in paying for the service.

Netflix has not yet announced how it plans to curb password sharing in the US, but has been running tests in Latin America

While Netflix hasn’t announced its plans for the U.S., it has been running tests in Latin American countries, where it lets subscribers pay to share accounts with up to two people outside of their homes.

Rather than blocking password borrowers from accessing someone else’s account, Netflix prompts them to enter a verification code for their device. The code is sent to the primary account owner, and must be entered within 15 minutes.

The password borrower can watch Netflix after entering the code, but might keep getting prompts until the account owner pays an additional monthly fee to add a sharer, according to people familiar with the tests.

Netflix is weighing similar plans for the U.S., according to sources quoted by the Wall Street Journal.

However, this approach has not come without challenges.

For example, it is difficult for Netflix to determine when a subscriber is traveling and watching from another location, like a second home or hotel, and the company has also also had to deal with particular family situation, such as when children split time between two parents’ homes.

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