The password-sharing era for Netflix is about to end. The streaming platform plans a "broader" implementation of password-sharing rules by the end of the first quarter of 2023, after testing billing in Peru, Chile and Costa Rica, the company said in its earnings report.
Netflix is ramping up its efforts to make viewers who watch its content for free using other people's passwords pay earlier this year, and previously announced it would start charging for sharing, introducing a system that adds fees for "additional members" sub-accounts when people outside the same household use the same account .
CEO Reed Hastings is stepping down after 25 years
The company also announced that CEO Reed Hastings is stepping down after 25 years at the helm of the company and will hand over the baton to Ted Sarandos, who was already co-CEO, and Greg Peters, Netflix's former COO.
Hastings is not leaving the company entirely and will instead take on the role of executive chairman. "We're ready to roll those out later this quarter. We'll stagger that a bit as we work through sets of countries," Netflix co-CEO Greg Peters said Thursday.
"But we'll really see that happen over the next couple of quarters." After launching the password-sharing charging program, Netflix says it expects some backlash in the form of cancellations in every market, but that the long-term benefits of people paying additional bills will result in "improved overall revenue." While they did not provide detailed information on pricing or a specific date, they suggested that they could go into effect in April.
Netflix has already been testing different ways to crack down on password sharing in South America and has started asking users in Chile, Costa Rica and Peru to pay an extra sub-account if the streamer discovers that someone using the account lives outside their home.
In May, a report suggested that this test against password sharing was not going well, with subscribers in Peru saying they had not been officially notified of the policy and that enforcement levels varied among users. The company did not specify pricing for these new fees when it confirmed the plans in October.
However, as this change has already been tested in Chile, Costa Rica, and Peru, in these countries the fee was about one quarter of the price of the standard plan, on average.