One of Netflix’s two big moves to halt its decline is doomed to fail, particularly in Australia.
One hundred million Netflix subscribers are following with great interest a small experiment that the streaming company is conducting in Peru, Chile and Costa Rica.
Those are the three areas where Netflix is testing a crackdown on password sharing, and so far it’s confusing its customers. The trial is testing a feature that asks existing customers to pay a premium (about $3 trillion) to share their password across their household.
Tech publication Rest of World spoke to a dozen clients in Peru this week and found a mix of messaging and enforcement approaches.
Rest of World reported from users that they felt there was little clarity on how a household is defined and that some members were sent messages to pay extra for sharing their password, while others did not .
Some users said they canceled their accounts after being confronted with the policy change, while others were able to “skip” the message and carry on as before.
Password sharing is a common practice among streaming users. It works by having a subscriber share their login and password details with someone outside their home, so the other household can also access Netflix’s (or other streaming service’s) platform while paying just that one fee.
It’s as common as Netflix revealed in April that 100 million of their 222 million paying accounts are engaging in the practice, in violation of their terms of service.
Anecdotally, viewers frequently exchange passwords with their friends and family. So you might pay for Netflix and your brother, who lives in another residence, might pay for Disney, and you trade access to each other’s accounts.
Password sharing has been around since Netflix got into streaming.
Netflix has said it’s never bothered to do anything about it while its growth has been so aggressive, but now that its membership is declining, the company sees a crackdown as an opportunity to recoup lost revenue.
Peru’s experience so far suggests that Netflix will have an uphill battle to convince its customers to pay a premium for what they’re already enjoying “for free.”
While it’s reasonable for Netflix to enforce its own policy, it has done itself a huge disservice by waiting so long to finally implement the measures.
The behavior is so ingrained that Netflix risks slandering its customers by telling them they’re wrong (even when they are) and demanding that they pay to rectify the situation — especially during a global one economic downturn and pressure on household budgets.
Even if it’s an extra $3 a month, it’s not the amount, it’s the imposition that will bite.
Australians in particular are reluctant when it comes to paying for programming. In the days before streaming, pay-TV usage never exceeded 30 percent, compared to significantly higher penetration in comparable markets like the US and UK.
Add to that the fact that local audiences have been at the mercy of broadcaster schedules for years and waited months for shows and episodes already aired abroad, creating a vicious culture of piracy that Australians have never quite abandoned.
Australians became voracious consumers of pirated content and were among the worst copyright thieves in the world.
It was fueled by a culture that deliberately separated the pirates’ claim to what they wanted to watch, whenever they wanted, from the exorbitant costs of producing ambitious television and film productions.
They didn’t care that they were wrong or that it was illegal – they felt indebted, not as filmmakers and producers.
It wasn’t until Netflix launched locally in 2015 that the idea of paying for TV shows was normalized and piracy rates reduced, but that earlier sense of entitlement never went away.
Netflix focused more on its originals such as stranger things, ozark and heart stopper it saw it lose its licensed titles to the studios that owned them and the market collapsed.
There are now nearly 20 paid streaming services in Australia, each with their own exclusive must-watch titles, and resentment is building among consumers as their streaming bills skyrocket — early expectations of $10 apiece Month for “everything” are nullified.
A government survey found that in 2020, 34 per cent of Australians had viewed pirated content.
All of this context makes it very difficult for Netflix to enforce a password crackdown in Australia, where the bitterness of those days of piracy still hangs like a sharp cloud, now aimed at the growing cost of accessing multiple services.
If Netflix decides to prosecute its customers for sharing their passwords — as its terms of service allow it to do — it loses any goodwill it rightly or wrongly left behind.
There are enough people obstinately unsubscribing under the guise of protest when in fact they are looking for an excuse to steal access to television and movies.
If left for so long, Netflix’s move is doomed to fail.
Originally posted as Netflix password crackdown doomed to fail