How Netflix’s password-sharing crackdown could fail – Forbes Advisor UK

Streaming giant Netflix is ​​developing plans to charge subscribers an extra fee for sharing their passwords with friends and family outside of their homes.

Research by Digital i and reported by The Guardian today claims that at least 27% of Netflix’s 14.9 million UK subscribers share their passwords with non-paying friends and relatives.

In a letter to shareholders last week, Netflix acknowledged that while password sharing has had a positive effect on its growth to date – with 222 million paying households signed up globally – around 100 million additional households are accessing to the service using shared credentials without paying.

In a blog post, the company said the ability to create profiles for different users under one account had “created confusion about when and how Netflix can be shared.” Netflix says sharing passwords impacts its ability to invest in content.

Trials are currently underway in Peru, Costa Rica and Chile, where Netflix subscribers are being asked to pay an additional £1.50 to £2.50 per ‘sub-account’ using the holder’s login details from the main account.

As it stands, Netflix identifies legitimate “internal” account sharing using IP addresses and device IDs, but identity verification experts say it can be spoofed, so which makes sub-account users appear to be the main account holders.

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Gus Tomlinson of GBG, a company specializing in identity verification technology, said Netflix may have to use stronger authentication methods to catch password-sharers: “What is clear is that Netflix will need to balance business needs with customer expectations. And it all starts with better understanding the identity of the true account holders.

She added: “We can see them moving into transaction monitoring, where they monitor user behavior and spot trends to identify what is normal and what is not, the same way banks monitor your account to identify potential fraudulent activity.

“So, for example, if they know you’ve never watched a rom-com but all of a sudden your account starts streaming When Harry meets Sally and You’ve got mailwhile you watch Thesilenceofthelambsthis could indicate that a password has been shared and a non-paying user is accessing the account.

Some have speculated that Netflix might use two-factor authentication (2FA) to authenticate logins, requiring users to enter a code sent to the account holder’s phone number or email address.

And while a passcode can be shared just as easily as a password, frequent 2FA requests could signal password sharing on an account.

The shift to sub-account monetization follows Netflix’s first-ever drop in subscriber numbers. In the first three months of 2022, the streamer lost 200,000 customers worldwide. He also warned shareholders that two million more subscribers were likely to leave in the three months to July.

Netflix announced price hikes last month, with monthly costs of up to £24 a year for some subscribers.

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