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Netflix to Crack Down on Password Sharing with Broad Rollout of Paid-Sharing Plan

Streaming giant Netflix announced on Tuesday that it is preparing to launch a “broad rollout” of its paid-sharing plan, aimed at cracking down on password sharing among its users, in the coming months. The move, which will eliminate unpaid account sharing, is expected to be unveiled in the second quarter of the year.

The paid-sharing plan, which was launched in four countries in Q1 of this year, will now be rolled out more broadly, including in the US, according to Netflix’s latest earnings release. The four countries where the plan was initially tested are Canada, New Zealand, Portugal, and Spain.

Netflix introduced a “buy an extra member” option in February, which allows primary account holders to pay an additional monthly fee to give access to up to two people they don’t live with. The company also launched paid-sharing tests in three Latin American countries last year.

While the password-sharing crackdown is expected to result in a short-term financial hit for Netflix, the company said the paid-sharing plan is a good long-term strategy. In Canada, the paid membership base is now larger than it was prior to the launch of paid sharing, the company noted.

“We see a cancel reaction in each market when we announce [paid sharing plans], which impacts near-term member growth,” Netflix said. “But as borrowers start to activate their own accounts and existing members add ‘extra member’ accounts, we see increased acquisition and revenue.” In February, Variety reported that the company plans to block devices that are being used by someone outside the account holder’s primary residence after a certain number of days.