Netflix launches paid account sharing in the United States: How much it will cost you

Jessica Guynn, USA TODAY

Updated Tue, May 23, 2023, 12:54 PM 4 min read

Netflix password-sharing rules

The popular streaming service used to encourage sharing Netflix credentials with friends and extended family. But it has changed its tune as subscriber growth slowed amid growing competition and a return to pre-pandemic viewing habits.

Now it’s looking to squeeze a few more bucks out of freeloaders.

“This is a way of getting folks who watch and enjoy Netflix to also contribute to the future of content,” Ted Sarandos, the co-CEO of Netflix, told the Toronto Star on April 6.

Cowen senior research analyst John Blackledge estimates that Netflix could pick up 2.1 million new U.S. subscribers from the initiative. Netflix accounted for 7.3% of total TV viewing in February 2023, according to Nielsen.

Moody's Investors Service says the password-sharing initiative could cause "short-term subscriber discontent and disruption but presents the company with a material revenue growth and margin expansion opportunity."

Wells Fargo Securities says paid password sharing could be a bigger earnings opportunity for Netflix than people signing up for its ad-supported subscription.

Will you pay for a Netflix account?

New Street Research says its survey of paying and nonpaying Netflix users found that more than half – 54% – would pay for their own subscription if their access was yanked, 70% would choose a subscription that is not supported by advertising and 37% would pay extra for people who don't live in their household."While only a small sample of the broader population of U.S. Netflix users, we think results bode well for traction of password restrictions," New Street Research said.

Will you cancel Netflix?

There is some risk, however. Netflix lost more than 1 million users in Spain in the first three months of 2023 after cracking down on password sharing in February, according to market research group Kantar.

However, Netflix told investors that after a wave of cancellations, subscribers began adding "extra member" accounts. In Canada, the number of paying subscribers is now higher than before, the company said.

Why is Netflix cracking down on password sharing?

Forty percent of consumers in U.S. internet households share credentials or use shared credentials, up from 27% in 2019, a Parks Associates survey found in 2022.

Some 100 million people watch Netflix using someone else’s account, the company says.

Citi analyst Jason Bazinet estimated that streaming services lose about $25 billion a year. Netflix accounts for about 25% of that lost revenue.

How does Netflix know who is in your household?

Netflix began testing features in Chile, Costa Rica and Peru that would let accounts pay extra to share access with up to two people outside their household in 2022. About one-third of Netflix subscribers live in the U.S. and Canada.

Netflix uses IP addresses, device IDs and account activity from devices signed into an account to determine who shares a household.

Netflix logo is seen on the side of the Netflix Tudum Theater in Los Angeles.

When will Netflix stop password sharing?

The gradual rollout of more limited password sharing has sparked a backlash among subscribers elsewhere in the world, especially families with children in college or long-distance couples.

Netflix says it has no choice but to crack down on “unpaid viewing” as subscriber growth slows. While executives say they know the new policy isn’t popular and some people may cancel their accounts, they hope to lure them back with quality programming.

How will Netflix enforce password sharing crackdown?

When the account owner signs in, they will set their primary location. Netflix will then use device and network signals to determine if other account users are part of the household.

Can I use Netflix in two different houses?

If not, those users will be prompted to start their own accounts or be locked out. The account holder can also pay a monthly fee to add another household.

Netflix says people who’ve been mooching off of other people’s accounts can transfer their viewing history and other settings to a new paid subscription.