Netflix shocked the world by saying it wants to finally tackle the rampant practice of password sharing.
According to the streaming service provider, over 100 million households are using a shared password, including 30 million in Canada and the United States.
But Netflix doesn’t plan to freeze those shared accounts but set extra fee for accounts that are being used by multiple people outside the home.
The plan is to recoup the lost revenue and it would start with an alert being sent to subscribers whose passwords are being used by other homes.
The company has started testing this feature in Costa Rica, Peru and Chile. For accounts that share a password across addresses, Netflix will charge an extra fee to add “sub accounts” for up to two people outside the household. The pricing varies between countries, about $2.99 in Costa Rica, $2.13 per month in Peru, and $2.92 in Chile, based on current exchange rates.
Also, Netflix allows people that use a shared password to transfer their customized profile information to a new account or a sub-account. This allows them to keep their viewing history and recommendations.
While talking during Netflix’s earnings conference call, Chief Operating Officer Greg Peters said: “If you’ve got a sister, let’s say, that’s living in a different city, you want to share Netflix with her, that’s great.
“We’re not trying to shut down that sharing, but we’re going to ask you to pay a bit more to be able to share with her so that she gets the benefit and the value of the service, but we also get the revenue associated with that viewing.”
Netflix didn’t reveal the amount of revenue it expects to raise from implementing its sharing strategy globally, though Peters said he felt it would take around a year to implement its sub-account pricing globally.
Peters also made it known that the company might tweak the pricing or review its test strategy further.
He said: “It will take a while to work this out and to get that balance right. And so just to set your expectations, my belief is that we’re going to go through a year or so of iterating and then deploying all of that so that we get that solution globally launched, including markets like the United States.”