Netflix Password Sharing Crackdown explained: Why your mother-in-law is going to have to start paying

The last week or so has been dominated by fear and concern over a change that’s coming to your Netflix account – a crackdown on password sharing. This is not new, we told you about this early last year – but it seems to be picking up steam so perhaps the global launch is closer than we all realise.

Background to Netflix’s Password Sharing crackdown.

Netflix has over 200 million customers worldwide. They do pretty bloody well too, they make $4-5billion a year – now that’s a successful business.

But not according to Wall Street. Given how the stock market works, the traders and suits all expect more, better, bigger, and they want Netflix to grow.

Without considering that frankly the company may have reached peak users, or that the Pandemic falsely inflated their global user base, there’s an expectation their “active user” numbers should rise.

So, rather than try and find new viewers – Netflix is forced to actually crack down on who’s watching the existing paid accounts, which is where this Netflix Password Sharing crackdown comes in.

If you’ve got an account at home, but you let your mother-in-law also use your account, that’s one user they could be adding to that 200 million counter.

That’s the entire goal here, to get more of their current viewers, to pay their own way, and at the same time raise their user numbers and revenue.

Who can legally watch my Netflix account?

Before you start to yell at your screen, there’s actually no argument about this – you’re probably doing the wrong thing. Netflix’s terms and conditions of service have for some time (at least five years that we could find records of) stated clearly:

The Netflix service and any content viewed through our service are for your personal and non-commercial use only and may not be shared with individuals beyond your household.

Netflix Terms and Conditions (4.2)

It’s right there on their website.

And a simplified version of that is on the plans and pricing page at Netflix too:

That simplified “A Netflix account is for people who live together in a single household” is really quite black and white.

If someone is using your Netflix account, and doesn’t live with you, they are the target of what’s to come.

This includes your children who might have moved to their own places, your parents or parent’s in law who might not use it much but you logged in on their TV to help them out, or that mate who you owe a favour to and happily setup that extra user profile for.

What’s changing with Netflix Password sharing?

Well, after almost a year trialling this in Chile, Costa Rica and Peru, it seems clear the company is planning to roll this out globally. Last week the Netflix website “accidentally” published the Password Sharing Guidelines which raised serious eyebrows for a lot of people.

In simple terms, Netflix will block devices outside your household from using your Netflix account.

Now it’s actually far far more complex than that, so let’s try and unpack it a bit.

How does Netflix know who is in my household?

Every device on the internet has an IP address – it’s a unique number that allows traffic and website requests to get from place to place to the right people. So with this Netflix Password Sharing crackdown Netflix will look at the IP address of your TVs and other devices and see which ones are all the same.

Basically, if you are password sharing with a mate or family member who lives somewhere else, they’ll notice that one will kinda stand out from the rest, and warnings will start to appear.

What if my IP Address changes?

For a large part of the time your IP address stays the same, but if the power goes out, or you are on a mobile connection it might change, perhaps even daily.

But what Netflix also has is a unique Identifier for your devices, like your TV and Mobile Phone. So when that TV reconnects the new IP address might be considered home, and that will be verified as more devices come online.

What if I move home?

Same deal as rebooting your modem, basically as long as all your regular devices appear to be at the same location, after the Netflix Password Sharing crackdown all will be well!

I travel a lot – will I still be able to use my Netflix account?

This one is interesting, and also confusing. Those leaked guidelines say you might need to request a temporary code from Netflix to allow you to sign in.

But it doesn’t say that’s always the case. It refers to those Hotel TV’s with Netflix or a company laptop. What it doesn’t say is that because you take your own iPad, phone or Laptop with you, one that has used Netflix at “home” , it will work just fine.

Travel for 3 weeks or a month and they might start sending notifications thinking you’re at a new household, but Netflix isn’t going to block every new device access, that will just be painful for them let alone users.

What is an Extra Member on a Netflix account?

Well, this is the master plan.

Netflix want you to stop letting the mother-in-law use your account. But they accept it goes on.

So after the Netflix Password Sharing crackdown they will have two new options.

Profile Transfers: This is for your kids when they move out of home and into the big wide world. They can choose to transfer their profile (viewing history, recommendations, all that good stuff) to an all new Netflix account, paying full fare of course:)

Extra Member: This is where you’ll pay a fee per month on top of your normal Netflix account, let’s call it $5.99 (just lower than the ad-included Basic Netflix plan), and your family member or mate can keep using that account. But there will be a limit of two extra sub-accounts or members.

I’m entitled to use my Netflix account however I want! They can’t do this!

Yeah, no you aren’t.

I know you skipped reading the terms and conditions, we all did. But it’s their rules and their business.

Netflix, like all streamers, are spending big dollars on making new TV shows and Movies, that money funds entertainers, movie makers, actors, writers, camera operators crew and so much more. So it’s not quite as bad as torrenting content, but arguing they can’t tell you who uses your account is like arguing that torrenting is your right.

It’s not, so suck it up.

When will this Netflix password sharing crackdown happen?

It could be any day now. It could also be many many months away as Netflix looks at the response to this “leaked” information online.

The backlash could hurt them, but in reality, the company has to do something to grow their user numbers. From a stock market perspective it will grow user numbers, but shrink ARPU (Average Revenue Per User)

Basically, it’s time to start thinking about who’s going to stump up the cash, or what you’re new password is going to be when you lock them out.