Netflix is testing an extra fee for subscribers to share their login credentials outside of their own households.
The plan will be tried out in Chile, Costa Rica and Peru, beginning in the next few weeks. Adding an extra subscriber will cost 2,380 Chilean Pesos, or $2.97; $2.99 in Costa Rica; and 7.9 Peruvian Sol, or about $2.11. The company said it will take time to evaluate results in the three initial countries before considering a wider rollout of the fees.
The long-expected curb on password-sharing comes as Netflix faces a bumpier path to adding subscribers and more competition than ever in the U.S. With 222 million global subscribers, the company leads the field and insists it is just a fraction of the way to the total addressable market, but making money from those subscribers will be increasingly challenging as the service matures and the growth curve flattens, as is the case in North America. Price increases have been implemented in the U.S. and Canada recently. Cracking down on password sharing is another lever Netflix can pull.
Newer rivals like Disney+ and HBO Max have taken a somewhat laissez-faire approach to sharing, as have incumbents Amazon Prime Video and Hulu. But with costs rising sharply for programming, there has been a growing sense that companies will start to be less permissive, as delicate as that may be. Netflix co-CEO Reed Hastings last year said the company would test various approaches, but would not roll out anything that seems to “turn the screws” on customers.
In a blog post, product innovation director Chengyi Long wrote that Netflix has “always made it easy for people who live together to share their Netflix account, with features like separate profiles and multiple streams in our standard and premium plans.”
Over time, she added, that functionality has “created some confusion about when and how Netflix can be shared. As a result, accounts are being shared between households — impacting our ability to invest in great new TV and films for our members.”
Along with the option to pay to share passwords, the company is also letting subscribers who pay for the account extensions to let the newer subletters transfer profile information, including viewing history and other personalized data.
“We recognize that people have many entertainment choices, so we want to ensure any new features are flexible and useful for members, whose subscriptions fund all our great TV and films,” Long wrote. “We’ll be working to understand the utility of these two features for members in these three countries before making changes anywhere else in the world.”