Remember the good ol’ days when Netflix actually encouraged us to share our streaming password?

Well, get ready for the hammer to drop. Netflix is cracking down on password sharing— and we have a hunch it’s going to impact more than just streaming. 

How many people will Netflix’s changing password policy impact?

A lot! 

We’re hard pressed to think of a password more freely shared than a Netflix password. Between parents and children, among siblings, roommates, and friend groups— the platform estimates over 100 million households are mooching on another subscriber’s account. 

All that sharing-is-caring comes at a cost. Citibank estimates password sharing costs the streaming industry as much as $25 billion a year. Netflix’s lost revenue estimate accounts for around $6 billion of that.

Considering Netflix has around 222 million subscribers, these freeloading friends are a drag on the company’s revenue, reach, and growth goals. And by late spring, expect the platform to do something about it. 

Sharing users will be given two options: Upgrade or get the boot

Netflix understands part of the fun of sharing an account is lurking on your friend’s and family member’s latest go-to shows. And their proposed upgrade option will allow additional users to pay a few extra dollars every month to continue sharing a joint account. 

For subscribers who don’t want the added user fee, non-household account members will be given the option to migrate their current Netflix profile to a new account. 

In the age of privacy concerns, we expect some users to push back against Netflix’s tracking methods

Here at MediaSpark, we’re data gurus. And that means we know a thing or two about data privacy, location tracking, and the push for greater control over your personal information. Unfortunately, Netflix’s crackdown will require even more data— and more granular tracking— than before. 

To find potential password-sharers, Netflix will ask every user to set a primary location. Typically, this will be your home address. Any devices that don’t sign into Netflix from that primary account location at least once every 30 days will be asked to re-verify their account. That means every time you log into Netflix, the platform will track your location and movements.

For those concerned about privacy and location tracking, having Netflix track your streaming habits as you travel may be unnerving— and may push some users to other streaming services. 

What does Netflix’s password tightening mean for users, streaming services, and brands?

Netflix’s small fee for out-of-household users is intended to dampen the disappointment of the password-sharing crackdown. But they also offer another low-cost option that can make starting your own account a little less expensive— Netflix with ads.

As streaming fatigue grows and the popularity of subscription stacking dwindles, nearly 80% of consumers will now consider a cheaper with-ads streaming service package over an ad-free, higher-priced tier. 

Netflix’s new with-ads option puts the platform on par with other services like Hulu and Peacock, and allows Netflix to more easily compete with free ad-supported streaming services like Tubi and Roku. 

This move towards ads gives brands even more cost-effective opportunities to target a captive and niche audience. More ad-supported platforms mean more opportunities to put your ads out into the world. Plus, it helps keep the price of streaming service ads realistic for local brands. In our book, this new Netflix product is a huge opportunity for growth-minded brands. 

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