The streaming giant estimates that around 100 million households share Netflix accounts, and doing so “undermines long-term ability to invest in and improve Netflix, as well as build business.”
The company believes the new policy will affect users who share their accounts more broadly. This is why last year, Netflix began testing two new features: a sub-account feature which will allow members to give access to additional users outside their household for a small amount and the ability to transfer new profiles to new accounts.
“As we roll out paid sharing, members in many countries will also have the option to pay extra if they want to share Netflix with people they don’t live with,” they explained.
The company also noted in the letter that they're already expecting borrowers to stop watching, with the possibility that they won’t convert to extra members paying for full accounts.
However, Netflix remains optimistic about its decision. “We believe the pattern will be similar to what we’ve seen in Latin America, with engagement growing over time as we continue to deliver a great slate of programming and borrowers sign-up for their own accounts.”
Password sharing has been an issue Netflix has long wanted to address.
In 2021, Netflix already entertained the idea of tracking password sharing by adding a log-in verification process. This was done by emailing a code to the account owner whenever an unsuspected user tries to login the app.