Netflix's Solution to Password-Sharing Is Off to a Rocky Start

With roughly half of all Netflix users sharing passwords with individuals outside of their household and Netflix reporting their first-ever loss of subscribers, it’s no surprise that the streaming giant is looking to crack down on overly generous members eager to give friends a Stranger Things or Bridgerton fix. But their solution to password-sharing may need some adjustments.

According to Yahoo, the company’s recent rollout of measures meant to mitigate users lending passwords to people outside their home has been met with confusion in test markets in Costa Rica, Chile, and Peru. Essentially, consumers are hazy on what constitutes a “household” and whether they’re subject to the roughly $3 monthly fee Netflix wants to tack on for sharing a password.

Through a spokesperson, Netflix clarified that they consider a “household” people living under the same roof. But users in Peru who phoned Netflix inquiring about the change were told someone outside the household could continue to use the service without a surcharge and while using a verification code.

Clearly, it will be hard to argue a distant relative living across the country is a household member. But what about a college student who maintains a residence with their parents? Or someone traveling for work? Or a distant cousin who is merely presented as being a college student or traveling for work?

Other users in Peru reported simply ignoring prompts to verify their account or not being notified of any terms of service changes at all.

Password-sharing is only one possible reason the company reported a first-ever subscriber loss. Increased competition from other streaming services like Disney+ and Hulu have led the company to explore other ways of maximizing revenue, like introducing an ad-supported tier.

At present, it seems like Netflix will have to rely on the honor system to a degree in order to enforce their updated policies or consider stricter measures for people accessing accounts outside of a household IP address. Then again, that’s why it’s called a trial.