The world was surprised this week by the announcement that it plans to address password sharing.
30 million households in the U.S. and Canada are using a shared password, according to the company.
The video streamer doesn't plan to freeze those accounts. The company will likely favor setting an extra fee for accounts used by multiple people outside of the home.
An alert will be sent to account holders whose passwords are being used by other households.
The company is testing this feature in several countries. For accounts that are sharing a password across addresses, there is an additional fee to add accounts for up to two people outside the home. The prices are different per country, for example in Costa Rica, it's $3 per month, and in Chile, it's $2 per month.
The company allows people who use a shared password to transfer their personalized profile information to either a new account or a sub account, allowing them to keep their viewing history and recommendations.
If you have a sister who is living in a different city, you should be able to share the service with her.
Peters thought it would take about a year to put the sub account pricing into use globally.
80% of Americans who use someone else's password wouldn't get their own new account if they couldn't share it, according to a survey. It didn't ask current account payers how much they would be willing to pay to share.
The company may review its test strategy, according to Peters.
He said it would take a while to get that balance right.
The plan is unprecedented. Major streamers have never cracked down on password sharing. Disney, Warner Bros. Discovery, NBCUniversal and Paramount Global will likely not set their own plans until after they review the changes to the password-sharing system.
Some account holders will be surprised that their passwords are being shared. If the primary account holder chooses not to pay the additional fee, it's unclear how long the shared account holders will be allowed to watch.
To avoid wrongly labeling people as abusers, the company will have to tread lightly around defining password sharers.
It would probably save millions of people from being kicked out of the service if they didn't act against this group of users.
LightShed Partners media analyst Rich Greenfield said that they will start with serial abusers.
The company isn't likely to want its employees involved in disputes about what constitutes a home account and what constitutes a sub account. It could get ugly for both staffers and customers if they were to contest those definitions.
Whether you use your own personalized profile or not,Netflix knows who you are.
Five years ago, the company encouraged password sharing. The company's philosophy at the time was to simply want more eyeballs on its content, which in turn would create buzz and lead to actual subscriptions. The strategy seemed to work. The last quarter was the last time that the number of subscriptions grew.
Love is sharing a password, that's what the corporate account of the company said.
The company would love it if you stopped doing it.
NBCUniversal is the parent company of CNBC.
There is a fee for password shares.
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