From next year, Netflix customers may soon face criminal charges for sharing their passwords.
According to The Wall Street Journal, the popular streaming service is planning to put an end to password sharing beginning in early 2023.
Netflix has been exploring ways to crack down on it for some time, and this is the first official notice that the changes will finally happen.
The company claimed that out of the 222 million households around the world with valid subscriptions, there were at least “100 million additional households” using their services via password sharing.
Households using Netflix through password sharing reportedly include more than 30 million households across the United States and Canada, Newsweek reported.
Netflix offers shared accounts with separate profiles and multiple streams in its plans, but only people living under the same roof apply.
The online media platform has been losing revenue for years to unauthorized password sharing, but it was willing to overlook the matter due to a surge in subscriptions over the past two years.
However, revenue has been falling since the start of this year, as it faces its first drop in subscribers in a decade.
The company has introduced fees for people sharing accounts not living in the same household in order to fight a decline in subscribers.
Subscription sharing has also made it more difficult for the company to expand its service and productions into new markets, according to the company.
Netflix’s terms of service had never allowed for multi-household sharing, which has read that it is the responsibility of “the member who created the Netflix account and whose payment method is charged” for any activity that occurs through the account.
“To maintain control over the account and to prevent anyone from accessing the account, the account owner should maintain control over the Netflix ready devices … and not reveal the password or details of the payment method associated with the account to anyone,” according to the terms.
“We can terminate your account or place your account on hold in order to protect you, Netflix or our partners from identity theft or other fraudulent activity.”
At one time, it considered offering pay-per-view content to discourage those with accounts from sharing their passwords, but company executives voted against that plan.
Meanwhile, Reed Hastings, the Netflix co-CEO, decided it was now the time to act on the password-sharing issue, which was neglected for too long.
His co-CEO Ted Sarandos agreed and said that the streaming service would finally crack down on it.
Viewers generally oppose price hikes, and the company needs to find a way to handle the sharing issue so people will “see the value” in the company, Sarandos told CNBC.
“There are folks who are enjoying Netflix, literally for free today,” said Sarandos.
“So, they’re getting a lot of value out of it. I think they’ll be happy to have their own account.”
Netflix will slowly phase out password sharing over time rather than ending it immediately so to avoid alienating customers and will ask those who share accounts with others outside of their household to start paying in 2023.
Those who continue to share an account outside the primary subscriber’s immediate household will have to pay additional fees under the new rules.
Netflix said it may possibly charge just below its $6.99 ad-supported plan for non-household users to boost revenue and wants those who are sharing passwords illegally to sign up for their own subscriptions.
The streaming service also expects to introduce other ad-supported subscription plans over time.
For example, Netflix’s current premium plan allows for Ultra HD 4K streaming and support for watching on four supported devices like iPhones, iPads, and Macs at one time, as long as those devices are owned by people in the same household but it does not allow multiple viewers watching outside of the same household.
The company will consider tracking particular information, such as Device IDs, IP addresses, and account activity, to help identify whether viewers are part of the same household to enforce the new rules, reported The Dallas Morning News.
The online video service had been testing add-on payments for password sharing in some Latin American countries, with an additional $3 fee.
The trial program reportedly makes primary account holders provide a verification code to anyone outside their household in order to access their account and repeatedly asks for the code until a monthly fee is paid to add non-household subscribers.
A similar method may be imposed on users in North America next year.