Netflix was trying to stop the exchange of passwords for over ten years. But last year and even stronger this week, the company gave serious symptoms the party is almost over. However, instead of indiscriminately limiting this favored leeway, Netflix could make some major changes to cut down on freeloaders without neglecting longtime customers who just want to help a friend.
AT letter to shareholders On Tuesday, the streaming giant said it lost about 200,000 subscribers this quarter, from 221,840,000 to 221,640,000. And Netflix predicts those numbers will continue to drop to around 219,640,000 in the second quarter of 2022. Accounts.
Netflix stock fell on Wednesday morning and the company is clearly in sort mode.
“It seems to me that Netflix is in crisis response mode and is rocking hard in one direction, but they haven’t given users the tools they need to address this issue in the first place,” says David Kennedy, CEO of incident response consultancy TrustedSec. “Even a simple warning that ‘this doesn’t look like you’ can be a better approach than taking a hard line on shared accounts.”
The letter to shareholders said that Netflix’s “relatively high household penetration – given the large number of households sharing accounts – combined with competition creates a headwind for revenue growth” and that it plans to get back on track “by improving our service and more efficient monetization of multi-household sharing.”
One of the main things Netflix can do to limit the number of people using shared accounts is to add a list of all the devices on which the account is active in Settings, with the ability to choose which ones to keep and which ones to cut. So the account holder can easily shorten the list – log out on devices they don’t recognize and Roku on Airbnb where they stayed last year. Currently, Netflix only provides a history of devices that have recently used an account and the ability to sign out of each device at the same time.
Of course, disabling all devices associated with your Netflix account is a great way to clean up and start fresh. It’s also hard to deal with and unlikely to be an attractive option for most Netflix users. That’s why giving users the ability to choose which devices stay connected is an easy way to cut 100 million freeloaders down to something a little more reasonable.
Since in many cases people don’t actually know the password to a random Netflix account they use for free, it’s likely to be enough to just allow users to download unknown devices from their accounts. If Netflix really wanted this system to work to its advantage, it could force a password reset and automatically reconnect every device the user chooses. So users have an easy way to clear their list of connected devices, and Netflix has a surefire way to limit rampant account sharing.
However, instead of going that route, Netflix recently launched strategy piloting in Chile, Costa Rica and Peru, which would allow a more comprehensive solution to the problem. “Add an additional member” is a way to add additional accounts for a few additional users for a small monthly fee so that the number of people you share an account with is more in line with the number of people Netflix knows are on your account. This approach will tie in more closely with streaming services like Spotify which offer family plans with a limited number of subusers. In many of these family plans, each member has their own login to eliminate Netflix’s password-sharing model entirely.
Another feature that Netflix is testing, “Profile Transfer to New Account,” will allow users to transfer only data from their profile (such as browsing history, individual recommendations, and bookmarks) to a new account or child account. Unlocking this data is believed to reduce people’s incentive to stay permanently on shared accounts.
Asking customers to pay a little more to share their passwords sounds like an obvious and reasonable approach. But given that Netflix’s standard service already costs over $15 a month and $20 for premium (the top end of the range for comparable video streaming services), adding additional per-user fees may not solve Netflix’s churn problem.
Sharing Netflix passwords has always been a security issue for several reasons. If your Netflix password is also the password for some of your other accounts, you grant access to multiple services with a simple gesture of sharing movies with a friend. And even if you don’t reuse your Netflix password across other accounts, easy-to-share passwords are fundamentally wrong. It is trivial for password cracking tools to guess “lolnetflixpassw0rd”. And because it’s so easy to share, there’s nothing stopping your sister from sharing it with her girlfriend, who then shares it with all her team members at work. Then one of her colleagues gets phished, and surprise! Your password is now being sold on a dark web forum.
Whatever Netflix does next is unlikely to happen anytime soon. “It will take some time to sort this out and strike the right balance,” COO Greg Peters said. reportedly said Tuesday. “I believe we’ll go through a year or so iterating and then deploying that.” And that’s good news all around.
“In the security realm, setting up a new control that affects all users doesn’t work well,” says TrustedSec’s Kennedy. “What works more effectively is subtle changes, providing information to users and explaining what is acceptable and what is not over time.”
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