How will Netflix end password sharing?

(NEXSTAR) – Netflix has already signaled it is ready to roll out some new rules when it comes to password sharing in the U.S. Changes rolled out in three other countries show what U.S. users could soon expect.

In a letter to shareholders last month, Netflix said it expects to roll out paid account sharing “more broadly” toward the end of the first quarter of 2023. The streaming giant estimates more than 100 million households share accounts, which “undermines our long-term ability to invest in and improve Netflix.”

Executives explained in the letter that they expect some users to cancel their accounts when paid sharing is launched but that “borrower households” will start their own accounts. How the paid password sharing will be enforced, and how much it will cost, wasn’t released.

Netflix has been exploring ways to crack down on password sharing, including a log-in verification process in 2021 and the use of sub-accounts for people living outside the account owner’s home in 2022.

The latter was tested in Chile, Costa Rica, and Peru. Netflix appears to have rolled out new rules on account sharing in these countries, updating its help pages for all three this week.

According to those pages, anyone within the account holder’s home – referred to as their “primary location” – can use that Netflix account. Those outside the home will need to use their own account.

Account holders will need to set their primary location while signing into Netflix on a TV connected to their home Wi-Fi. Then, any devices connected to the Wi-Fi network in the primary location will be able to access the holder’s Netflix account, while devices trying to access the account from any other locations may be blocked. If an account owner doesn’t set their primary location, Netflix says it automatically using their IP addresses, device IDs and account activity.

Once a primary location is set, Netflix users are asked to “watch something at least once every 31 days” in order to keep their devices associated with the location.

In order to share the Netflix account with someone outside the primary location, the company says the account owner can add an extra member to their account for a small fee.

Netflix users in these three countries may also be blocked from streaming on some devices if they try to access the platform while traveling or after moving. In that case, Netflix says users should either stream something before leaving their primary location to create a “trusted device,” or request a temporary code to verify their device “and continue watching Netflix for 7 consecutive days.”

It isn’t clear how accounts with plans that allow multiple screens would be impacted by these changes. It also isn’t clear if Netflix plans to bring the same system to the U.S. – Netflix didn’t immediately respond to Nexstar’s request for comment.

Netflix’s move to tackle password sharing is a shift from the company’s previous stance. Then-CEO Reed Hastings (he stepped down as CEO last month) said in 2016 that Netflix wouldn’t charge users for sharing their passwords. Instead, he called password sharing “something you have to learn to live with,” CNBC reports.

Hastings had also never been a fan of ads, calling them a distraction from the entertainment the service provides. But, in November, Netflix launched a fourth plan, “Basic with Ads,” that includes an “average of 4 to 5 minutes of ads per hour.” Users on this plan also don’t have access to Netflix’s full library.