Netflix Tests If It Can Monetize Password Sharing: What You Need To Know

Netflix Inc (NASDAQ: NFLX) is cracking down on unrestrained password sharing outside a single household in certain markets.

What Happened: The streaming giant is testing a new feature that will require subscribers to cough up money when they share their password with people they don’t reside with, according to a blog post by Chengyi Long, Netflix’s director of product innovation. 

The feature will be launched and tested by Netflix in Chile, Costa Rica, and Peru over the next few weeks, according to Long. 

Netflix subscribers in those countries would be able to share their standard and premium plans to add “sub-accounts”, for up to two people they don’t live with, at a lower price of 2,380 CLP ($2.98) in Chile, $2.99 in Costa Rica and 7.9 PEN ($2.12) in Peru. 

Netflix is also adding a feature that will allow users to remove other people from their accounts, calling it “Transfer Profile to a New Account.” 

That will allow people who share passwords to transfer profile information such as viewing history and recommendations to an extra member sub-account or to a new subscriber.

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Why It Matters: Long said Netflix is working to understand the “utility of these two features” for members in the three countries before it rolls out changes elsewhere.

“We recognize that people have many entertainment choices, so we want to ensure any new features are flexible and useful for members, whose subscriptions fund all our great TV and films,” said Long.

It was reported earlier this month that Netflix is testing a new feature that asks customers to verify if they share a household with an account owner.

The password crackdown plan had drawn praise from Nat Schindler, a research analyst with BofA. Earlier this month, he cited a BofA survey of a pool of Netflix subscribers, in which 26% said they shared their Netflix passwords with another household and 50% of these said it was shared with family in multiple locations.

Price Action: On Wednesday, Netflix shares closed 4% higher at $357.53 in the regular session and 0.4% in the after-hours trading.

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