Netflix's terms of service state you're only allowed to share your password with people in your household. Still, so many users do violate these terms.Netflix knows it, has done so for a while, and has decided to switch it up and introduce regulations on password sharing. But how effective can they really be? Let's look at the platform's rollout and how people seem to take it.

Netflix Password Sharing Isn't a New Issue

It's hardly a secret that Netflix users share their passwords. The issue of password sharing has been on the platform's mind for quite some time.

In 2016, Netflix co-founder and chief executive Reed Hastings appeared content with accepting the losses from password sharing, saying that "password sharing is something you have to learn to live with."

In 2019, chief product officer Greg Peters stated that Netflix was exploring the concept of password sharing but had nothing to announce.

And in April 2021, Hastings claimed that Netflix is still trying to find a solution to the issue but that it wouldn't implement a policy that might feel like the company is pulling the rug from under its users. Netflix promised that before anything gets executed, it has to make sense for users.

Well, the platform finally decided password sharing is no longer acceptable and, in February 2023, announced it's ''rolling out new features.'' Netflix users rushed to share their displeasure online and pointed out how the proposed rule switch didn't make much sense. As a result, there was a prompt backpedal, and the updated rules were deemed a mistake by the platform itself.

Yet, in May of the same year, Netflix US users also started receiving the dreaded notifications. You would put Netflix on and get greeted by a message saying ''Netflix is meant for you and the people who live with you,'' with a few follow-ups urging you to confirm your household. The backlash online was swift, and no one seemed happy with Netflix.

What's the Benefit of Netflix Password Sharing?

First off, before getting into all the issues, let's make one thing clear. For many people, the hindrance stopping them from subscribing to Netflix themselves is the cost. If you can't afford to pay for a monthly subscription, sharing it is an appealing alternative.

Most people who share passwords tend to be friends, partners, or family members who live apart. Even Netflix understands that the people guilty of password sharing aren't doing it maliciously but rather out of necessity or as a sign of affection.

If you're a broke college student who lives on campus, and your sibling offers to share their Netflix account with you, would you say no?

Granted, there are certain risks to sharing your Netflix account, but the positives usually outweigh the negatives.

For Netflix, It's All About the Bottom Line

Revenue increase

Netflix remains the streaming service with the most subscribers. Its subscriber count has shown consistent growth through the years, and that growth was expected to continue in 2023. However, with the introduction and enforcement of these new rules, Netflix may start to bleed subscribers.

The platform boasts over 250 million subscribers, which is already mind-boggling, albeit not enough for the people behind the curtain. And, it makes you wonder what that number would turn into if people stopped sharing their passwords and each had their own account.

And though it appears Netflix is banking on just that, the opposite is very true, too. People may cancel memberships.

What Could Netflix Do to Stop Password Sharing?

While before, Netflix preferred the carrot strategy over the stick, that appears to have changed.

Users were quick to share online how Netflix has begun warning people about password sharing by sending out notifications. The messages appear when you turn on Netflix and inform you how the service is meant for people who live together, and you need to confirm you're part of the same household.

To do that, you're expected to set up a Netflix household, after which the service looks at all the devices that share an account under the same IP. If the discovered devices are not part of the same household but continue to share an account, access will become limited.

At the time of writing, Netflix allows you to postpone going through that process but warns that if you delay setting a household for too long, one will be set for you, making it inevitable.

What Would Happen if Netflix Did Change Its Password Policies?

If Netflix remains steadfast in its attempts to limit accounts to single households, it's a coin toss what could follow. Best case scenario for the platform would be its profits and subscriber base increasing as every user, now on a shared account, would have to create their own or pay an additional fee.

However, on the other hand, there could be canceled memberships and unhappy customers. People don't like being pushed into corners and forced to pay more. Not to mention, it's a hassle if you travel frequently or move locations often.

Though Netflix promises travel wouldn't be an issue, streaming services are supposed to be easy and simple. And the platform's current plan seems to expect its subscribers to jump through hoops.

Of course, you don't have to create a brand new account and start from scratch—liking and disliking shows and making a new My List can be time-consuming. So, Netflix offers a Transfer My Profile feature, which is handy if you decide to remain a subscriber with a sole account.

Should Netflix Even Try to Stop Password Sharing?

All major streaming platforms today permit users to have multiple profiles under the same account. And they all face the same issue.

How do you know which users share their passwords legitimately and which don't? Is there a foolproof way to tell the difference? So far, the answer is no. Even under Netflix's current rollout, people have already found loopholes—turning to VPNs and the Meshnet feature.

This new crackdown on password sharing is a massive gamble for Netflix. While it could be positive, it could also lead to many lost subscribers.

And, again, while Netflix could benefit from the new password-sharing rules, its users would certainly not. Instead, they'd receive the same service, only now they'd have to pay for a separate account or an additional fee.