Netflix is finally cracking down on password-sharing

Bad news for a lot of people out there

If you’re still using the Netflix password belonging to your ex from 12 years ago, we’re afraid we have some bad news. 

For many years throughout its rise, Netflix took something of a surprising stance: They didn’t much mind if its customers shared their passwords. 

Back in 2016, Netflix CEO Reed Hastings said on an earnings webcast that the company had no plans to do anything to put a stop to the practice. 

“Password sharing is something you have to learn to live with because there’s so much legitimate password sharing, like you sharing with your spouse, with your kids…. so there’s no bright line, and we’re doing fine as is,” Hastings said, per CNBC.

Hastings is still the CEO of Netflix today, although he took on Ted Sarandos as co-CEO last year. But it appears the company is rethinking its stance on passwords. 

Per The Streamable, which appears to have noticed it first, Netflix has been running a test with some customers, in which a message appears: “Start your own Netflix for free: If you don’t live with the owner of this account, you need your own account to keep watching.” 

The report says the test only applies to Netflix on TV devices. 

“This test is designed to help ensure that people using Netflix accounts are authorized to do so,” Netflix told Streamable in a statement. 

What’s the reason for the change? Another new report sheds some possible light on it .

According to a report this week by Citi analyst Jason Bazinet, as cited by FierceVideo, U.S. streaming services lose about $25 billion a year in revenue from password sharing, with Netflix accounting for about 25 percent of that total. That puts the total revenue lost by Netflix at about $6 billion per year. Netflix made over $25 billion in revenue in 2020, so that $6 billion figure, if accurate, would make a significant dent. 

In addition, the streaming wars have gotten a lot more competitive since 2016, when Hastings made those comments, inspiring Netflix to fight for every dollar it can. 

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