The Margin: Here’s how — and where — Netflix has started cracking down on password sharing

And where it once seemingly encouraged users to share their account passwords — tweeting “Love is sharing a password” six years ago — Netflix is now to cracking down on those who share their Netflix accounts.

Netflix had 230.75 million subscribers worldwide at the end of the fourth quarter, but the company believes another 100 million people are using Netflix via shared login information.

In an effort to monetize those viewers, Netflix has begun introducing a variety of measures to stop people from sharing their passwords — or at least to make more money off those who do. The new measures were launched earlier in February in Chile, Costa Rica and Peru.

Netflix instituted new password-sharing rules in those countries after testing the measures throughout 2022. While it has not begun implementing any of these rules in the U.S. — yet — the company said during its most recent earnings announcement that it will start cracking down on password sharing “more broadly” in other countries by March 31.

On Feb. 8, it added Canada, New Zealand, Portugal and Spain to its crackdown.

What are the new rules?

In all of the aforementioned countries, Netflix account holders must choose a primary address and then verify that location once a month.

“To ensure that your devices are associated with your primary location, connect to the Wi-Fi at your primary location, open the Netflix app or website, and watch something at least once every 31 days,” reads Netflix’s FAQ page.

The company believes this should ensure that people who don’t live at the account holder’s primary address won’t be able to use the account holder’s login information to stream from somewhere else. But people with standard or premium Netflix subscriptions do have the option to add an extra member to their account for an additional monthly fee of $2.99 in Chile, Costa Rica and Peru (which may vary based on a country’s currency), CA$7.99
USDCAD,
-0.02%
in Canada, NZ$7.99
NZDUSD,
+0.03%
in New Zealand, €3.99 in Portugal and €5.99 in Spain, Netflix says.

Those additional members can watch Netflix on any device but can only watch on one device at a time.

The streaming giant will verify the main account holder through an IP address (the series of numbers that identify any device on a network) and not by geographical location, a Netflix spokesperson told MarketWatch. That’s in part because enforcement based on the geographical location of the main account would prevent a user from signing in to their own Netflix account while away from home on a mobile device like a phone or laptop.

What if you’re traveling and want to use your account on a device in a different location?

If a Netflix account holder wants to log in on a device that isn’t associated with the account’s primary address, they can — but only temporarily. Account holders can request a temporary code that is valid for seven consecutive days and will allow them to view Netflix on a device not associated with their main address.

Other people attempting to log in from outside the primary address “may be blocked from watching Netflix,” the company’s website reads.

In the latest release about curbing password sharing in Canada, New Zealand, Portugal and Spain, Netflix’s director of product innovation, Chengyi Long, said account sharing is “impacting our ability to invest in great new TV and films.”

Netflix would not share specifics about its plan to curb U.S. password sharing with MarketWatch, including whether it will implement any of the new features introduced in Chile, Costa Rica and Peru, saying it will take a “nuanced” approach. But, a spokesperson noted, “we’ve done it in the other three countries, of course we are going to take specific learnings from those three countries and apply it to other countries.”

And while Netflix’s terms of service for the U.S. already state that an account “may not be shared with individuals beyond your household,” the company admitted to MarketWatch that it has not really enforced that policy outside of cracking down on bad actors who have tried to exploit the service by reselling login information, for example.

Right now in the U.S., one Netflix account can have up to five profiles regardless of membership tier. These are used to differentiate content suggestions and watchlists between profiles, as well as to give parents the ability to add maturity-level restrictions for kids’ accounts.

See also: Netflix tells employees, ‘You may need to work on titles you perceive to be harmful’

Netflix co-Chief Executive Greg Peters said during the company’s latest earnings call that the crackdown on password sharing is meant to “nudge” users who are watching Netflix into paying for it. “We understand this will not be a universally liked decision, similar to raised prices that lead to churn for a period of time,” Peters added.

Netflix currently has four monthly subscription options: basic with ads ($6.99), basic ($9.99), standard ($15.49) and premium ($19.99). For all four service tiers in the U.S., an unlimited number of devices can be used to log in under a single account — but only a certain number of users can stream the service at once, a Netflix representative told MarketWatch. The number of concurrent streams allowed varies by plan, such as two screens streaming at the same time on the standard plan, or up to four screens streaming at once on the premium plan.

Netflix debuted its ad-supported plan last November to compete in the streaming wars with services like Walt Disney Co.’s
DIS,
+0.13%
Disney+, Apple’s
AAPL,
-1.77%
Apple TV+ and Warner Bros. Discovery Inc.’s
WBD,
-5.02%
HBO Max.

As streaming gets more expensive, many consumers are taking stock of how much money they are spending on streaming services each month, leading analysts to wonder whether we have reached peak streaming.

Also see: ‘No one is immune’: Activist investors target tech companies after stocks dive

Some news outlets this week reported that Netflix has already rolled out its new rules to end password sharing in the U.S., but Netflix told MarketWatch that the restrictions don’t currently apply to the U.S.

“Nothing has changed so far for the U.S. — nothing,” the spokesperson said.