If you’re a Netflix subscriber, there’s a major change coming to the subscription service that you may need to take note of. Netflix has begun rolling out a new update that is supposed to clamp down on “password sharing,” i.e. where people in different households share a single Netflix account. What this means is that if you have relatives or friends who use your Netflix login, things are going to get a lot more complicated.
Essentially, Netflix will begin forcing all of its users to designate one network as their “home” network, and all devices using that Netflix account will have to log in on that home network at least once a month. If they don’t, or if Netflix’s algorithm suspects that there’s a case of “freeloading,” as the company has insultingly termed it, additional verification may be required – such as entering a code sent to the registered email address.
There is a solution, though, for all of you “freeloaders” out there! Netflix will very generously allow you to continue to share your password – for a fee, naturally. In Chile, Peru, and Costa Rica, where this scheme is being trialled, the additional charge will be $2.99 (approx. £2.44 here in the UK). Inventing a problem or inconvenience in order to sell a solution is a business model as old as time itself, but there are good reasons to think that it won’t work in this case.
The mistaken assumption that Netflix is making is the same fundamental misunderstanding that the music industry made in the early 2000s when Napster and other sharing sites first rose to prominence: that for every password shared, they’re missing out on a subscriber. The music industry incorrectly assumed that every download was akin to a CD not being sold, and Netflix is making the same basic mistake more than twenty years later.
This is desperation from Netflix, as the company clearly has no idea how to gain more subscribers in an increasingly competitive streaming market. Rather than trying to reach new groups of people by creating or licensing films and shows that would appeal to them, Netflix is banking on the flawed notion that this crackdown will lead to millions of new subscribers. It won’t.
Most folks who access Netflix via a friend or family member’s account won’t magically be transformed into new subscribers by this move. And the aggressive, insulting way that the company has approached it is even likely to turn people away – being compared to pirates and being called “freeloaders” is not a great way to win support for what was always going to be a controversial move.
Netflix has been upset with password sharing for a long time, but the truth is that it has been a huge benefit to the company. It’s very hard to put a price on the kind of chatter and buzz that some of Netflix’s shows have attracted on social media, and in part that’s been possible because of, not in spite of, password sharing.
Let’s break it down. Password sharing means more folks have access to Netflix – potentially tens of millions more people are able to watch the shows and films that Netflix has created and licensed. Practically all of those folks use social media, and when they see something they like, they hop online to talk about it. Hashtags trend on Twitter, Facebook posts get more likes, Instagram pictures get more comments, and so on. The resultant online buzz hypes up shows, leading to more and more people becoming aware of them, wanting to watch them, and in turn, signing up for Netflix.
Netflix shows as diverse as Wednesday, Tiger King, and Squid Game have all blown up in the last few years. Why is that? Because of the conversations they prompted on social media, with many “freeloaders” joining in those conversations, amplifying them, and spreading Netflix’s brand to a wider audience. This is the power of social media – and doing anything at all that cuts off potential viewers can be catastrophic.
I’ve made this exact same argument from the other side in relation to Paramount+ and the Star Trek franchise. Because Paramount+ has been so slow to arrive in practically every country outside of the United States, it’s been much, much more difficult for any of the platform’s shows, including the renewed Star Trek franchise, to gain much attention online. Because most folks can’t watch these shows, they don’t talk about them. Hashtags don’t trend, posts reach a smaller audience, and the resultant lack of online chatter harms Paramount+ in the United States as well as around the world.
Netflix is about to make the same mistake. By cutting off potentially tens of millions of viewers from its platform, Netflix won’t only fail to pick up new subscribers, it’ll almost certainly see its big investments fall well short of expectations. It will be much more difficult in the months and years ahead for another Wednesday or Squid Game to take the online world by storm, because with an audience that’ll be tens of millions of people smaller, those shows won’t gain as much attention.
We’ve been able to see for a long time that the streaming market is becoming oversaturated, with too many corporations all chasing the same audience using the same business model. Quite a few of these streaming services are not long for this world, and by the end of the decade – if not sooner – we should expect to see many failures and closures.
Netflix felt like a behemoth, an unassailable juggernaut at the pinnacle of the streaming game. And why shouldn’t it? Netflix was the pioneer of this business model, and its success is what directly led to the creation of Disney+, Paramount+, Apple TV+, and many of these other platforms as they sought to imitate its success.
But Netflix has become vulnerable, and this attempt to clamp down on “freeloaders” shows just how desperate the company is. Its position as the market leader has been challenged, and its ongoing success is no longer assured. It’s not inconceivable any more that Netflix might end up as one of the casualties in the “streaming wars” – something that would have seemed impossible not so long ago.
Netflix needs to walk this back and apologise – today, if possible. Treating its own audience so badly, with terms like “freeloaders” being thrown around, is appalling, and this money-grubbing move was always destined to end in failure. Netflix is in a better position than many companies in this market, and is still a synonym for “streaming” in many households. But even brand names that are so well-known that they enter the popular lexicon can still end up failing – just ask Skype about that!
For a long time, Netflix was almost the default streaming platform that people would pick up. A good mix of films, television shows, original content, and more was a tempting offer – especially for the price. But as Netflix continues to jack up its prices and behave in ways that aren’t consumer-friendly (to say the least) its reputation is slipping. As more companies enter the market – and crucially, reclaim or even buy back their own properties – Netflix feels diminished. This attack on password sharing is a symptom, not the root of the problem.
I dumped my Netflix subscription last year, when the platform lost the Star Trek franchise to Paramount+. There haven’t been many Netflix projects in that time I felt were must-watch events… and that’s the platform’s biggest problem by far. It needs to get a good mix of older and newer content, and create shows that people actually want to watch. Cancelling popular shows because they didn’t generate new subscribers in large numbers is kind of missing the point – Netflix is in a position right now where retaining current subscribers, and convincing lapsed ones to rejoin, is a much more pressing concern.
So that’s what’s going on. Be aware that Netflix plans to implement this change if you still use the platform, and it’s probably also worth keeping an eye on the streaming market. It could be a very interesting year!
Wait… does this mean there could finally be an opening for Paramount+ to take the world by storm? Nah!
This article contains the thoughts and opinions of one person only and is not intended to cause any offence.