As the topic that won’t go away, I need to ponder Netflix’s decision to clamp down on password sharing.
When it was first discussed about a year ago, I took it in stride, thinking it was a perfectly reasonable things to do. Netflix sells a single membership, meaning to an individual or family. Customers shouldn’t expect to share their password with people who are vaguely related, live halfway across the country, or lived in the same house for a few months.
If the company had been lax about enforcement, the party was over: only legit subscriptions in the future. Those enjoying Netflix service without paying for it would be pissed off. The immediate, outraged response from consumers wasn’t surprising. However, when getting something for free that usually costs money, it shouldn’t be a big suprise if it expires.
Astonishingly, the furor continues about the ‘capitalistic’ or ‘unfair’ moves by the company. Taken to a silly extreme, if the whole world used one Netflix password, the company would vanish in a bankrupt puff of logic, ending the popular service.
What is at the root of the ongoing discord about Netflix enforcing their subscription policies? Before investigating, several possibilities sprung to mind:
- policies were poorly written in the first place, misleading customers,
- lack of enforcement of policies lead consumers to conclude password sharing was acceptable, because who reads the terms and conditions? & if everyone does it, it’s ok, right?
- people are accustomed to obtaining ‘free’ content, so the concept of charging for content seems unreasonable,
- economic conditions (inflation) are making consumers cost conscious. They’re looking for companies taking advantage of the situation – not to say that this is the case with Netflix, but people are looking for scapegoats,
- Netflix has been around over 20 years, thus a generation has matured into adulthood with their parent’s subscription and are surprised it isn’t something they own when they start their own household,
- social norms are evolving, as is the definition of a family unit,
- consumption of content has become more mobile. In Netflix’s history, a selling feature was the ability to download a show and watch it on the go; this might seem like the same thing as sharing a password in a variety of locations, but amounts to logging in from a different household.
According to this post made by Netflix in Feb. 2023, the intent of the company was always to provide subscriptions to single households (so, not #1, at least by company statement). It also states about 100 million households are sharing accounts. That’s a lot – roughly 1/5 of subscribers1 are using shared passwords and is unlikely to have occurred overnight. Someone at Netflix in finance or marketing or customer service must have suspected user numbers were under-represented for several years. Or were astonished at how many titles the average household was consuming. (Supports #2)
The number of multi-household accounts suggest that enforcement systems have been weak. Although subscribers might have known this was ‘too good to be true’, without any repercussions, the idea that password sharing was acceptable could have gotten around.
Netflix’s new approach to managing password enforcement2 suggests a few things. They’re made it easier for people to move to individual household accounts by profile transfer, and allow guests and content consumption while travelling for subscribers. In effect, accommodating today’s world, while maintaining the single subscription concept. (#6)
The company’s efforts and explanations suggest that it hadn’t accommodated social change in the past, supporting the idea that a generation that has grown up with Netflix is expecting to take their parents passwords, like their favourite duvet or frying pan, to their new home. This aligns with #5 and #6.
The distinction between personally viewing your account where ever you are, and sharing your password where ever you are, is subtle. It’s friendly to use someone else’s WiFi to connect while in their home. Different from continued logins on someone else’s WiFi to your account without you. But it’s been so easy to abuse the system (#7).
Should the company be blamed for the password sharing situation if it allowed it to happen? Netflix may be guilty of trusting people to only have one account per household, rather than implementing controls to enforce it. Is this the same as the police being at fault for motorists speeding because they don’t issue enough speeding tickets?
As for the argument (#3) that people are accustomed to free content, consumers are getting increasingly savvy about what the trade-off is for free things – often personal data. On the flip side, a good business model remains direct pay for premium consumable media (i.e. latest movies, fav shows, up to the minute sporting events). People know what is typically free content and many are willing to pay for more.
People (no I don’t mean you) have been highjacking content since it was invented, probably back to prehistoric times when one tribe did something amusing around the evening fire while a member of another tribe watched from a thicket, then went back to their own tribe and pretended they’d made it up themselves. In cable TV times, there were black boxes (literally) that whipped up access to content behind a paywall. If you usually have to pay for something, but don’t, why would you think it was legitimate?
Netflix may have made mistakes by not rigorously enforcing their polices from the start. That said, if it the original product is to provide service to a single family via a single password, anyone expecting different hasn’t a case.
But this isn’t a story about right and wrong. It’s a story about making customers happy. Customers are not happy about new rules that cost them more for the same service. But they’re also not going to be happy if the business goes out of business.
The risk Netflix takes in enforcing its password policy is having a competitor lure its customers away, with promises of, well just about anything in an entertainment streaming service at a reasonable, even on par with Netflix, price. Customers are likely to be interested, because they are annoyed with Netflix.
I’m staying tuned to see the next episode.
1This site puts the number of Netflix subscribers at about 230 million https://www.statista.com/statistics/250934/quarterly-number-of-netflix-streaming-subscribers-worldwide/
2Same post as previously mentioned.