Netflix is cracking down on household password sharing: Other streaming services not far behind, expert warns

The good old days of password sharing on Netflix are coming to an end. 

The streaming platform implemented its crackdown on household sharing with an announcement posted on its website. 

Following the move by the streaming giant, CoinDesk Chief of Staff of Content Pete Pachal warned on "Mornings with Maria" that other services are "watching very closely to see what happens."

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Netflix made public, effective May 23, 2023, it was sending an email to members who share passwords outside the household clarifying its rules.  

"A Netflix account is for use by one household. Everyone living in that household can use Netflix wherever they are — at home, on the go, on holiday — and take advantage of new features like Transfer Profile and Manage Access and Devices," it stated. 

Pachal commented on how Netflix's move could impact the streaming service industry and its competition. 

"The era of subscriber growth is all but over," he said.  "Like that rapid growth, everyone's number of subscribers is leveling off. Whether you're Peacock, whether you're Hulu, whatever you are, you're not getting the same amount of subscribers, so you're looking for more revenue from your existing subscribers." 

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He added, "it's funny, the other streaming services have not dug into Netflix too much. Basically, Amazon Prime dug at them a little bit on Twitter, but not many of the others have, I think because they're watching very closely to see what happens with Netflix, and if this actually works in terms of the growth that they're expecting after the initial dip."  

The tech analyst warned that if Netflix's crackdown becomes a success other competitors could implement similar strategies. 

"If that happens, I think a lot of the other services will follow suit because why not? If you can get more revenue from your existing subscribers by making this move, you would do it," he said. 

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Pachal went on to explain Netflix's plan for the new household rules. 

"If you try to log into your Netflix accounts from somewhere else, from another location, you're going to get a prompt that is going to ask you, Hey, is this your primary location? This account is meant for people in the same household." 

However, users are able to change their location if they are on vacation or have a summer home. 

He also warned that Netflix will keep tabs on location changes. 

"The problem is, if you keep doing that back and forth, back and forth between the same two locations, they're going to detect that pretty easily and shut you down." 

Pachal explained that Netflix wants to get more money from extra subscribers by adding an extra member to plans, and has met consumer backlash after previously encouraging password sharing. 

"There's a lot of people just saying they're going to leave the service on principle because of this idea that they're kind of almost going to be competitive with their own customers, he said."

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He noted that the move could impact Netflix negatively initially, but could see growth in the future. 

"They'll probably suffer some losses in the initial weeks and months after they do this," he said. "After that initial drop, subscribers actually grow at an accelerated rate. So people essentially get over it and either add extra members or people will spin out their own accounts."

"If that's true, we could be entering another period of huge growth for Netflix, but it is a bit of a gamble, certainly," he added.