Password sharers beware: Netflix plans a crackdown

New rules are designed to limit sharing outside a single household

Today's expression: Come up
Explore more: Lesson #548
February 20, 2023:

After turning a blind eye for many years, Netflix is now planning to tighten its rules around password sharing. Out of 215 million paying accounts, the company says, perhaps 100 million share a password with someone outside their household. The company plans to use authentication codes and other tools to determine who is part of the main account and who is not. Plus, learn the English expression "come up."

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In 2017, a Netflix social media post said this: “Love is sharing a password.” A lot of customers agreed. But now, Netflix is falling out of love with password sharing

Lesson summary

Hi there everyone, I’m Jeff and you are listening to Plain English lesson number 548. At Plain English, we help English learners around the globe upgrade their language skills, and we use current events and trending topics to do it.

There’s one other name you need to know, and that is JR. He is the producer. He works behind the scenes to bring you the full lesson resources each and every Monday and Thursday. Today’s full lesson is at PlainEnglish.com/548.

Coming up today: Netflix is falling out of love with password sharing. And the world’s biggest streaming service is planning to crack down on accounts that share passwords with people outside their households. This is part one of a two-part lesson; on Thursday, we’ll talk about the pros and cons of how, exactly, Netflix plans to get freeloaders to pay. In the second half of the lesson, I’ll show you how to use the English phrasal verb “come up .” And we have a quote of the week. Let’s dive in!

Netflix to introduce stricter controls on password-sharing

It’s hard to imagine this now, but Netflix was once a scrappy upstart company. When I first signed up, Netflix delivered physical DVDs in the mail in red envelopes. It was a new concept, in an industry dominated by in-person movie rental businesses like Blockbuster .

Having dominated DVD rental, Netflix then moved into streaming. But here, too, its success was not guaranteed. When Netflix started streaming, many people’s internet connections weren’t fast enough to get high-quality video. And there was real concern that video streaming couldn’t possibly become popular, because the internet providers simply couldn’t open up that much data to each household. People honestly thought that Netflix would break the internet: it would pump out more content than internet companies could deliver.

Looking back, that seems quaint. Netflix took advantage of its early start and created the streaming video industry, becoming a global behemoth in the process. But just ask Facebook: as a company grows to dominate the globe, it can be harder and harder to grow. Growth in a streaming business can come from three places: attracting new subscribers, keeping existing subscribers for longer, and selling more to the subscribers it already has.

Netflix is doing all of those things. Its new low-cost, ad-supported tier is aimed at households without the budget for the full-price plan. It’s furiously adding new content, including video games, to prevent subscribers from cancelling. But the tactic I’ll focus on today is getting existing subscribers to pay more. And that means getting them to pay extra for people who share passwords.

According to Netflix’s terms of service, one account belongs to one household. A household is a group of people living in the same house or apartment as the person who pays the bill. Anyone who does not live in the same house is not part of the household and, according to the terms of service, that person would need their own account.

This has never been enforced, and password sharing is rampant. Today, Netflix has 231 million paid accounts, the most subscribers of any video or music streaming service. But there’s a catch: Netflix believes that out of those 231 million paid accounts, perhaps 100 million share passwords with people outside their home. That’s 40 percent of users who are, technically, violating the rules. And that’s 100 million people who could, maybe, possibly, become new paying Netflix customers. In a world where it’s hard to get new subscribers, this is a tempting target.

There are a few kinds of password sharing. The first is within families, but with family members living apart. Think of college-age students, for example, who only live at home part time. Or think of an extended family where one person shares a sibling’s account, even though they live separately.

The other kind of password sharing is casual sharing among friends and contacts. Imagine a group of friends are talking one night, and the latest Netflix show comes up in conversation. One person in the group doesn’t have Netflix, and that person is curious about the show. She wants to watch the first episode, just to see if she likes it. One friend shares a password, she signs in, likes the show, and then…never really bothers to get her own subscription. She could get her own account, but why? She’s already logged in with a friend’s account, so there’s no need.

And then the final kind of password sharing is more clearly abuse of the system, where one account holder adds many unrelated people with the purpose of minimizing the costs.

Netflix has never cracked down on sharing passwords. But the company is planning a global rollout of new password-sharing policies. The policies haven’t been announced officially, but there are some clues. Netflix has been piloting new password-sharing policies in three countries—Chile, Costa Rica, and Peru. And Netflix inadvertently uploaded copies of its new policies to its help center in the U.S., before quickly taking them down. The policies aren’t final until they are released, but here’s what the leaked drafts look like.

The new policies will be centered around a “primary location.” This would, presumably, be the primary accountholder’s home. Each account would identify a primary location. And all devices that log into the account must access Netflix from that primary location once every 31 days.

If a device accesses Netflix but is not at home, and if that device has not connected at home in the last month, then the accountholder gets an e-mail with an authentication code. The accountholder has 15 minutes to enter the code to gain access to the device. And that device can access Netflix for one week. After a week, you have to repeat the process.

Notice I said, it’s the accountholder who gets the e-mail, not the person who signs in. So if I’m accessing Netflix from JR’s account, it’s JR who gets the authentication code, not me.

Netflix says it will use IP addresses, device ID numbers, and geolocation data to determine who is in a household and who is not. This is a two-step strategy. The first step is to make it inconvenient, but not impossible, to share passwords outside your household. And the second step is to make it easy for the password-sharers to get their own paying accounts.

This is a major change in the culture and expectations of streaming, which is how so many of us get our entertainment today. And what Netflix does, as the market leader, could influence what other streaming services do in the future.

On Thursday, we’ll talk about the delicate balancing act that Netflix faces. It wants to get additional revenue from freeloaders , but it can’t infuriate its legitimate users.

Netflix started with DVDs

Did you know that Netflix still delivers DVDs and Blu-ray discs by mail? Did you know they ever did that? Oh yeah, Netflix used to send movies in the mail, and they still do. I think it’s only available in the U.S., but here’s how it works. You go online, you create a list of movies and shows you want to see. You subscribe to a certain number of discs out at time. So let’s say you have a two-DVD plan. They’ll send you the first two movies on your list in the mail in a red envelope—no case, just the DVD in a white sleeve in a red envelope.

You watch the first DVD, you return it in the mail in the same envelope. They send you the next one, so that you always have two DVDs either at home or in the mail. And that’s how you work down your list, you watch them, return them, get new ones, et cetera. And this is how Netflix started. I had this for years, before they even started their streaming business.

The advantage to this was—and I miss this—but Netflix had everything. Every movie you wanted to see, new or old, Netflix had it because they didn’t have to negotiate the rights like they do today. If something is on streaming Netflix today, it means they bought the rights to stream it. And that’s why different platforms have different selections of content.

Well that wasn’t a problem in the DVD by mail business. They just bought the DVDs in bulk and mailed them out. This was how Netflix just obliterated the in-store DVD and movie rental business, was through DVDs by mail. Because there were no late fees. If you didn’t return a movie, you just didn’t get the next one. That was punishment enough!

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Expression: Come up