New Netflix password sharing rules likely to be repeated by other streamers: expert

TORONTO — Canadians who spent the month sorting out how to untangle Netflix accounts shared by loved ones after new policies came into effect this week should get used to the debacle.

The streaming giant's rivals are bound to follow Netflix in limiting the unfettered password sharing that has allowed friends, family members and even more extraneous connections like exes and old acquaintances to use the same accounts, said Richard Lachman, an associate professor at Toronto Metropolitan University's RTA School of Media.

"It is quite likely that this will just become the industry standard," he said.

Tech companies, Lachman said, are known for engaging in "copycat behaviour," where they let rivals experiment with new models they will mirror after consumer reactions have been tested and best practices are developed.

He added that the incentive to end password sharing is also high because subscriber numbers and growth projections have come under pressure as the number of streamers has multiplied in recent years.

Last spring, Netflix reported its first subscriber loss in more than a decade, which was partially triggered by its decision to withdraw from Russia to protest the war against Ukraine, resulting in a loss of 700,000 subscribers.

It projected further losses were to come and within months was preparing to crackdown on password sharing.

Netflix notified Canadian consumers earlier this month that they would have until Feb. 21 to designate a "primary location" to their account, which will eventually be used to recognize anyone who accesses the account outside the home base.

Netflix did not share how it would go about blocking access to those outside the primary location, but told premium and standard account holders they could buy access for extra users outside their home for $7.99 per month.

Premium high-definition 4K subscribers doling out $20.99 per month are allowed to add two extra members, each at that rate, while standard subscribers, who pay $16.49 per month, can add one additional member.

But convincing people to pay for a service they accessed for free and without recourse for so long is not easy.

"If you offer something for free or for cheap under certain terms, it's really hard to take that back because people get really angry," Lachman said.

"Whereas if you launched it that way, they might not have batted an eye."

While users have griped about the awkward conversations they are now having with people whose accounts they piggybacked on for years, Lachman suspects Netflix's move won't result in a massive subscriber revolt.

Instead, he foresees Netflix's new policy encouraging more consumers, especially younger and more tech-savvy ones, to frequently switch between services rather than subscribe to many at the same time.

"We might see people try and shop," he said. "They'll say, 'I am going to do Netflix and then cancel my subscription. When I have seen a bunch of things that are there, I am going to move to Disney or I'm going to move to Crave."

Others might turn to illicit streaming, he said.

"This extra hiccup of having now to pay an additional thing might lead to some increase in piracy again," Lachman said.

"Not all people are going to do it, not all people are going to be really savvy enough to do it, but it is a portion."

This report by The Canadian Press was first published Feb. 22, 2023.