Netflix’s Effort To Thwart Password Sharing Is Already A Bit Of A Mess

Back when Netflix was a pesky upstart trying to claw subscribers away from entrenched cable providers, the company had a pretty lax approach to users who shared streaming passwords. At one point CEO Reed Hastings went so far as to say he loved" password sharing, seeing it as akin to free advertising. The idea was that as kids or friends got on more stable footing (left home to job hunt, whatever), they'd inevitably get hooked on the service and purchase their own subscription.

But as Netflix subscription numbers have begun to go south and competitors are challenging Netflix's market share and revenue, the company is predictably taking a harder stance on the practice.

The company recently announced it would be testing a new system that would impose additional fees on an account holder if Netflix can see that the account is being used outside of the account owner's home. Netflix hasn't explained precisely how this will work, only that it's testing the effort in Chile, Costa Rica, and Peru, where users who share accounts now have to pay around $3 more a month.

But there's already trouble in Netflix's deployment of the program. RestofWorld notes that messaging, implementation, and enforcement of the program in Peru has been a mess," leaving consumers confused as to what the hell Netflix is actually doing and regulators eyeing an intervention:

For some, the price increase has been enough to convince them to cancel their Netflix accounts outright. Others continue to share their accounts across households without any notification of the policy change or have ignored the new rule without facing enforcement. Overall, the lack of clarity around how Netflix determines a household" and the differing charges levied on different customers have left subscribers in the trial confused, risking action from consumer regulators.

As the report notes, Netflix appears to have thought it would be a good idea to test these added hikes in smaller markets with more low-income households that are already struggling to afford basic services. All because Netflix executives want to claw back some revenue from a practice industry executives previously and repeatedly made clear wasn't that big of a deal.

Streaming providers like Netflix already limit the number of maximum possible concurrent streams by each account. And there's no guarantee that users harassed with additional warnings and fees will automatically decide to sign up for their own account - as opposed to just signing up for any of a growing number of cheaper Netflix competitors like Amazon Prime, Hulu, Disney Plus, Paramount Plus...

Netflix reported its first subscriber loss in a decade back in April due to a number of factors, including competition, customer dissatisfaction with program selection and quality, and a recent significant rate hike. Imposing yet another poorly messaged rate hike on top of its existing headaches likely isn't the winning subscriber-boosting strategy many Netflix executives seem to think it is.