A Netflix experiment to crack down on password sharing outside of households has perplexed users, with the streaming giant increasing subscription fees for such users, forcing some to cancel their subscriptions.
Netflix quietly launched an experiment in three small Latin American markets in March, asking customers to pay a fee if they shared their account passwords outside their homes.
In Peru, Chile, and Costa Rica, the streaming giant announced a new password-sharing policy.
According to global tech news site Rest of World, the price increase has convinced some Netflix users to cancel their accounts completely.
“Others continue to share their accounts across households without any notification of the policy change or have ignored the new rule without facing enforcement,” the report said.
Overall, the ambiguity surrounding how Netflix defines a “household” and the varying charges levied on different customers has left test participants perplexed, “risking action from consumer regulators.”
As OTT platforms see an increase in subscriptions as a result of the pandemic, the problem of password sharing has grown, resulting in stalled user growth for several players.
The major OTT providers, including Netflix, are working tirelessly to address the issue of password sharing.
Netflix’s terms of service have always stated that subscribers are not permitted to share accounts with people outside of their household, but the platform had never previously imposed additional fees for violating the policy.
Netflix representatives told Rest of World that while they understand that some subscribers associate “household” with immediate family, the company has always defined the term as people living in the same building.
According to the company, different subscribers may be charged differently.
The National Institute for the Defense of Free Competition and the Protection of Intellectual Property (Indecopi), Peru’s consumer rights agency, stated that the “differing charges could be considered a way of discriminating against users arbitrarily”.
Netflix’s stock dropped 20% after it reported a loss of 2 lakh paid subscribers in the first quarter of 2022, the company’s first subscriber loss in over a decade.
Furthermore, it predicts a 20 lakh global paid subscriber loss in the April-June quarter (Q2).
Netflix is rapidly losing long-term customers. According to a survey conducted by The Information, people who have been Netflix subscribers for more than three years accounted for 13% of cancellations in the first quarter of this year.
