Different Times, Different Practices

Netflix Password Sharing Lives On Borrowed Time

It might be a while yet, but — if the numbers are true — freeloaders will have to choose eventually

Netflix has allowed password sharing for as long as anyone can remember, but times are changing in the streaming market and this might too — sooner rather than later. (Image credit: Alexander Shatov, Unsplash)

It certainly has been a long time coming (more than a decade in fact) but the day that around 70 million people will be inconvenienced does not seem to be that far off anymore. Last week several media outlets followed on a few tweets that posted photos of their TV screens displaying an unusual message from Netflix: “If you don’t live with the owner of this account, you need your own account to keep watching”. It turned out to be a test run of a feature that Netflix had repeatedly denied that it would implement in the past, but is clearly considering now: the restriction, or outright banning, of password sharing. Officially the company insists this was just a test. For anyone watching the streaming wars unfolding, it wasn’t.

The password sharing of a Netflix account among several households is something that the service’s terms of use clearly prohibit, but also something that the American company has always allowed — one might say that, in the early years, it even helped Netflix become as popular as it is today. One might also note, though, that research companies published during the last 5 years or so reports claiming that 25%, 30% or even 35% of the Netflix accounts actively used belong to a different subscriber. That is a lot of non-paying customers for any subscription service to accommodate. Especially for a service belonging to a company that has shareholders to answer to.

For the longest time it was extremely difficult for Netflix to track password sharers with absolute certainty but British company Synamedia uses AI to make this much, much easier. (Image credit: Thibault Penin, Unsplash)

So in 2019 — while Netflix’s official position per Greg Peters, chief product officer, hadn’t changed — the Americans started working with a little-known British company called Synamedia. That company had developed a special algorithm that could track shared Netflix accounts and, using AI and machine learning, determine whether any password sharing happening between different people was within the usage parameters Netflix had set. This started out as a collaboration to combat credentials fraud, not password sharing. *

Fast forward to last week when a number of people read on their screens that “If you don’t live with the owner of this account, you need your own account to keep watching” message on their screens. Netflix feels — based on its own data and probably its own algorithm — that it can now determine whether someone is using the account credentials of e.g. a friend living on the other side of town (so not of the same household) with his/her consent. That would be an easy case to determine, actually, as there are other “edge” cases — like e.g. a college student using his parents’ Netflix account on campus, technically belonging to the same household but at a different location most of the time — that will be harder for Netflix to be strict with.

Netflix insists that the password sharing blocking test it runs does not necessarily mean that such a function will be implemented in the service, but it’s a matter of when rather than if. (Image credit: Jonh-Mark Smith, Pexels)

Right now the company is letting freeloaders off the hook, in a way, asking for verification via SMS/e-mail (which a rightful owner could provide) but also allowing them to do so at some other time while encouraging them to create their own one-month-free trial account. This is, in truth, the test Netflix is talking about: the estimation of a probable “conversion rate” among people that don’t have their own accounts to get their own, as well as the overall reaction of people on the Web when this test run was revealed by the media.

Netflix runs many tests about different things quite frequently, of course, and many of those tests never lead to actual features on the service. One can’t help but feel, though, like this particular test is different. Netflix now stands at around 205 million subscribers and even if a conservative 25% of those are not paying customers, it’s more than 50 million consumers not contributing to its bottom line. When times were simpler — with no competition from the likes of Disney, no urgent need to build a movie library because studios keep their films for their services and no danger of slowing growth in the US or globally — Netflix could afford the freeloaders. In 2021 we may discover that this is no longer the case.

* An earlier version of this story mentioned that “Synamedia’s algorithm was also trained to locate password sharing happening with the rightful owner’s consent”, implying that this is the algorithm now in use by Netflix. This is not the case. Synamedia’s PR got in touch and clarified that their credentials fraud solution is not used by Netflix — so the Americans have either developed their own algorithm or licensed the algorithm of another third-party.

Veteran journalist, project kickstarter, tech nut, cynical gamer, music addict, movie maniac. Will work for money, fame and bandwidth. More on farkonas.com.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store