For the longest time, one of the best "features" of Netflix was that it took a very laid-back approach to people who shared passwords on their accounts. For example, a college student might continue using their parents' account even after they've moved out, or a former roommate might be using a friend's account even though they no longer live with that person.
It turned out that was a great move, from a business perspective--one that every entrepreneur could learn from. Netflix grew into the largest streaming service because it had a great content library, but also because it was the default. Everyone used Netflix (even if some of them weren't paying for it).
While the practice wasn't explicitly allowed, Netflix never really seemed to mind, with its CEO, Reed Hastings, once saying that the company might "test many things, but we would never roll something out that feels like turning the screws." That came in response to a notification that appeared on some accounts when they tried to log in from outside of the subscriber's home.
"If you don't live with the owner of this account, you need your own account to keep watching," the prompt would tell you. Netflix would then require a two-factor authentication text message sent to the account owner in order to continue watching.
Now, however, Netflix is testing a new feature that will prompt account owners who share their password to pay $2.99 for an "additional user." If you don't want to pay up, you'll be given the option to transfer the user to their own account.
The announcement comes from Netflix's "Product Innovation" team. I'm not so sure most people would see this as any kind of innovation. I get that Netflix is looking for what I'm sure it thinks are innovative ways to generate more revenue as subscriber growth slows, but if you're making the experience worse, it's not innovation. Especially, since the move comes not that long after Netflix said it would again raise prices.
Here's the thing--almost everyone already uses Netflix. They've either subscribed on their own, or they're using someone else's account. That means there's no one left to sign up for new accounts unless the company can find ways to get password sharers to pay for an account of their own. The company said as much in its announcement of the test:
We've always made it easy for people who live together to share their Netflix account, with features like separate profiles and multiple streams in our Standard and Premium plans. While these have been hugely popular, they have also created some confusion about when and how Netflix can be shared. As a result, accounts are being shared between households--impacting our ability to invest in great new TV and films for our members.
It seems that the company has finally decided that, if it's going to find more people to subscribe, it's going to have to make them very uncomfortable about sharing passwords. Look, it's entirely within Netflix's right to require people who use its services to pay for them. It's a business, after all. It didn't become the most dominant streaming service in the world by giving away its content for free.
Except, it kinda did.
By turning a blind eye for so long to a practice it knew its customers were using, it gave it an implicit endorsement. It should come as no surprise that people might be a bit upset that the company has now decided to take a hard line. You might even say it feels a bit like Netflix is "turning the screws."
Currently, Netflix is running the test in three countries (Chile, Costa Rica, and Peru), and there's no guarantee that it will become permanent. Even so, that hasn't stopped people from getting upset.
Sure, it's true that the people who are most likely to be upset here are people who aren't actually paying for Netflix, or people who are sharing their password with people who aren't paying for Netflix. Still, those people are still Netflix's customers, and they're doing exactly what Netflix has allowed them to do for almost 15 years.
That's really the point here. Netflix isn't wrong to want people to pay for Netflix. But if it does it in a way that alienates those customers, or makes the experience worse, I'm not sure that's the win the company thinks it is.