Netflix’s Password Sharing Experiment Isn’t Going So Well in Test Countries

Users in Peru are confused by inconsistencies and lack of information on how the new system works.
Netflix on iPad with Earpods and Popcorn Credit: Riccosta / Shutterstock
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Netflix has made it clear that a crackdown on password sharing is just around the corner. In preparation for that, the company has been testing a new paid tier in a handful of countries for those who want to share their Netflix account with friends and family members outside their household.

Unfortunately for Netflix, the experiment doesn’t appear to be going particularly well. Subscribers in the three countries where the new “Extra Member Accounts” have been trialed over the past few weeks have been left dazed and confused as to exactly what the streaming giant is trying to accomplish.

According to Rest of World, the new initiative hasn’t been well-received in Peru, where Netflix customers have complained of a lack of communication about the new program and inconsistent enforcement when it comes to where Netflix is cracking down.

Rest of World spoke to over a dozen Netflix consumers in Peru, many of whom say that more than two months after the policy was first announced, they have not received uniform messaging around the new charges, nor do they seem to be subject to the same policies.

The trial, which Netflix announced in March, rolled out in Chile, Costa Rica, and Peru, allowing users to add an “Extra Member” to their Netflix account for a much lower price — the equivalent of around $3 in U.S. currency.

Extra members can only be added for Netflix subscribers on the Standard and Premium plans since they don’t add any additional screens; users on a basic plan only get one concurrent stream, so Netflix presumably feels there’s no point in allowing those subscribers to risk pre-empting their own viewing by adding an extra member.

Subscribers can also only add two extra member accounts, although they’ll each get their own profile and personalized recommendations. They can also be turned into a full Netflix account should an extra member wish to go it on their own.

Unfortunately, even though 41 percent of streaming users in Peru are Netflix customers, the company hasn’t done much to inform them of the new trial. Even when it has, it hasn’t offered much clarity on how it works and when users actually have to pay for an extra member account instead of legitimately sharing their main Netflix account.

Since Netflix is still running the new plans on a trial basis, customers are likely being treated a bit differently right now as it comes to grips with the terms of the policy and how to apply it. Netflix representatives told Rest of World as much, saying that “the rollout has been progressive,” and it’s not yet enforced for every subscriber.

The biggest problem Netflix faces is the somewhat ambiguous definition of a “household.” Despite a few hastily spoken words by CEO Reed Hastings in 2016, Netflix has always considered subscriptions to be “a household-level purchase.”

As it’s most apparent, a “household” means those living under the same roof. Netflix has no problem with family members sharing a single account and password in that case; it’s the very reason why Netflix allows multiple profiles and multiple screens, as there wouldn’t be much point otherwise.

On the other extreme, handing out your password to your co-workers and friends you don’t live with would be going against Netflix’s terms of service. Even though people do this, there’s no arguing that it’s not something that Netflix permits.

Where things get complicated is that grey zone between those two extremes: immediate and close family members who don’t live with you. Netflix has said that it’s “probably OK”for kids to use the family login when they go off to college, but they should sign up for an account of their own once they “form their own household.” On the other hand, while sharing your family’s Netflix password with your elderly mother in her rest home may be a nice thing, it does run counter to the letter of Netflix’s policies, if not their spirit.

Netflix representatives told Rest of World that it knows some subscribers understand “household” as related to immediate family but that it has always defined the term as people living in the same building.

Netflix representatives have been making it clear in recent months that “household” has always and only ever meant “people who live together in a single household,” period.

In an emailed statement to The Verge, Netflix spokesperson Kumiko Hidaka confirmed that this has been the company’s policy for at least five years.

While we started working on paid sharing over 18 months ago, we have been clear for five years that ‘A Netflix account is for people who live together in a single household.’ The millions of members who are actively sharing an account in these countries have been notified by email but given the importance of this change, we are ramping up in-product notifications more slowly. We’re pleased with the response to date.Kumiko Hidaka, Netflix

That Netflix hasn’t consistently enforced this is the main problem, of course, and even some employees seem at a loss about what to say about the policy change. Rest of World reports being told by an anonymous customer service representative in Peru that they haven’t been told how to respond to questions about the new program in that country.

The anonymous customer service representative said that she was instructed that if a subscriber called arguing that someone from their household was just using the account from another location, she should inquire further and tell the subscriber that they could use their account without extra charge via a verification code.

Ironically, this Netflix rep candidly admitted to Rest of World that she still shares her account with friends outside her household, yet she hasn’t been notified of any extra charges.

The confusion has led consumer protection agencies in Chile, Costa Rica, and Peru to meet with Netflix executives to insist that they more clearly define a “household” to avoid consumer complaints. Peru’s consumer rights agencies also stated that the differencing charges could be considered discrimination against users if they’re not applied fairly and equitably.

If there’s one thing that seems apparent from all this, it’s that Netflix may need to take a couple of steps back and rethink its approach if it plans to crack down on password sharing this year.

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