Netflix Plans to Cut You Off From Password Sharing by the End of March

Netflix has announced some changes over the last year to help support its bottom line.

Netflix has faced very few stumbling blocks as one of the first out of the gate in its field. Today, it's still the largest streaming service in the world, with more than 223 million subscribers globally, according to Adweek. But despite its astronomical growth over the past decade, the company is finally beginning to feel some sharp growing pains as it struggles to keep up the pace. Last April, the company announced it had shrunk for the first time in a decade with the loss of 200,000 subscribers in its first quarter of the year, forecasting it would lose close to two million more in the next quarter, CNN reported.

The sudden reversal of fortune led the company to begin a slow transformation that would change specific policies it has held since its earliest days. In a memo sent to employees, Netflix executives said they planned to add an ad-supported subscription tier for the first time at a lower price by the end of 2022, The New York Times reported. But the company also said that it planned to begin cracking down on password sharing in the near future, saying it intended to charge those who split their accounts with family or friends starting sometime in 2023.

Netflix now says it plans to crack down on password sharing sometime by the end of March.

Now, the company is laying out a timeline for some expected changes. In its fourth-quarter earnings report released on Jan. 19, Netflix said that "2022 was a tough year, with a bumpy start but a brighter finish." But the letter also confirmed that it plans to move forward with its plans to crack down on shared accounts in the coming weeks.

"Later in Q1, we expect to start rolling out paid sharing more broadly," the report says, meaning the changes will likely be enacted by the end of March, Mashable reports.

"Today's widespread account sharing (100M+ households) undermines our long-term ability to invest in and improve Netflix, as well as build our business," Netflix explained in its letter. "While our terms of use limit use of Netflix to a household, we recognize this is a change for members who share their account more broadly."

The company says it's losing too much money to keep its long-standing lax policy.

So far, the company has been gradually building up to the change by offering users the ability to export their settings from their profile on a shared account to a new paid subscription. "We've worked hard to build additional new features that improve the Netflix experience, including the ability for members to review which devices are using their account and to transfer a profile to a new account," the report stated

While the company didn't reveal any specifics on how the new system would work, it has previously tested password-sharing in Costa Rica, Peru, and Chile. Viewers in those countries have paid $3 a month for shared accounts since the program was announced last year, CNN reported.

"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," the company wrote. "As is the case today, all members will be able to watch while traveling, whether on a TV or mobile device."

Best Life has reached out to Netflix for more information on the policy change, but has yet to hear back.

Overall, the company said it finished the year out strong thanks to some high-performing shows and movies.

But the password policy change wasn't the only big news included in the company's earnings report. Netflix also said it had exceeded "revenue, operating profit, and membership growth" forecasts, citing high-profile releases like the popular Knives Out sequel Glass Onion and the Harry & Megan docuseries as successful draws. The company also said it was "pleased with the early results" of the release of its lower-priced ad-supported tier in December, reporting that the streaming service finished the year overall having generated $32 billion in revenue.

The company also admitted that it expected its upcoming password-sharing change would be unpopular, saying that it will likely lead to a decline in viewership and "near-term engagement" as some users lose access. But it said its experiments in Latin America showed that customers would likely sign up for their own accounts in due time.

"We believe we have a clear path to reaccelerate our revenue growth: continuing to improve all aspects of Netflix, launching paid sharing, and building our ads offering," Netflix said.