A Netflix experiment to crack down on password sharing outside of households has left users flummoxed, as the streaming giant increased subscription fees for such users, forcing some of them to cancel their subscriptions.
In March, Netflix quietly rolled out an experiment among customers in three small markets in Latin America, asking them to pay extra when sharing their account passwords outside their homes.
The streaming giant announced the new password-sharing policy in Peru, Chile, and Costa Rica.
According to the global tech news site Rest of World, for some Netflix users, the price increase has been enough to convince them to cancel their 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,” the report said.
Overall, the lack of clarity around how Netflix determines a “household” and the different charges levied on different customers have left subscribers in the test confused, “risking action from consumer regulators”.
As the OTT platforms witness a surge in subscriptions amid the pandemic, the problem of password sharing has also grown and resulted in installed user growth for several players.
The major OTT giants, including Netflix, are working relentlessly to fix the problem of password sharing.
Netflix’s terms of use have always stated that subscribers are not allowed to share accounts outside of their household, but the platform had never previously enforced extra charges for infringing the policy.
For the first time, the company is defining “household” as exclusively people a subscriber lives with, said the report.
Netflix representatives told Rest of the World that it knows some subscribers understand “household” as related to immediate family but that it has always defined the term as people living in the same building.
The company said different subscribers might be paying differing charges.
Peru’s consumer rights agency, the National Institute for the Defense of Free Competition and the Protection of Intellectual Property (Indecopi), said that the “differing charges could be considered a way of discriminating against users arbitrarily”.
Netflix saw its stock tumbling by 20 percent after it reported a loss of 2 lakh paid subscribers in the first quarter of 2022, its first subscriber loss in over a decade.
Moreover, it forecast a global paid subscriber loss of 20 lakh for the April-June quarter (Q2).
Netflix is fast losing long-term subscribers. According to a survey report by The Information, new data show that people who have been subscribers to Netflix for more than three years accounted for 13 percent of cancellations in the first quarter this year.
