Netflix has finally started testing a way to charge users for sharing a password with friends and family after promising to clamp down on the practice earlier this year.
A report from Bloomberg this week reveals that Netflix is now asking users in five Latin American countries to pay an extra fee of up to $3 to share their passwords by using their account in an additional home.
Bloomberg says that from this week customers in Argentina, El Salvador, Guatemala, Honduras, and the Dominican Republic will be asked if they use an account for more than two weeks outside of their primary residence, with an extra fee if they say yes. That’s $1.70 in Argentina but $.299 everywhere else.
Netflix says the move won’t affect anyone on vacation or using a mobile device. The clampdown presumably relies somewhat on user honesty, as Netflix is asking customers to give an answer to a question rather than tracking them through any technical parameters.
The end of password sharing?
It comes after Netflix reported a slump in subscribers earlier this year. The streaming giant says that it believes 100 million households use accounts they aren’t paying for, a huge source of lost revenue for the company. Netflix says it lost 200,000 subscribers last quarter and this week announced it had lost nearly a million subscribers in the most recent quarter. Despite this shares are up strongly in pre-market trading because the company has reported a return to growth. The loss in subscribers for Q2 was also much milder than expected.
Chengyi Long, a director of production innovation, said that widespread account sharing between households “undermines our long-term ability to invest in and improve our service.” It is thought that password sharing is particularly high in Latin America where the test is being conducted.
Regarding the overall process, Netflix now asks members to pay an additional fee to add a member to their account complete with their own email address. That extra member will then be able to use Netflix within the usual confines of a subscription, depending on how many devices a user pays for.
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