Netflix tests a new feature that will raise prices for account sharing

Netflix will begin testing a new, opt-in feature that will prompt subscribers to pay extra if sharing the service with people outside their own household. The feature will allow households to add up to two “sub accounts” for a fee that’s less than the cost of the full-priced Netflix service. The new option will initially be tested in Chile, Costa Rica and Peru and will roll out over the next few weeks to those markets. The company didn’t say if or when the feature would be rolled out to global subscribers.

At launch, Netflix’s Standard and Premium subscribers in the test markets will be offered the option to add sub accounts to their service for people they don’t live with. Each sub account will have its own profile and personalized recommendations, as usual. But what makes this feature different is that the sub accounts willl also have their own Netflix login and password. Plus, if they ever choose to set up their own Netflix service under their name and billing information, their viewing history, watch list (“My List”), and personalized recommendations will transfer over.

To make this feature work, Netflix isn’t relying on location-based data, like GPS. Instead, the company is leveraging the same information it uses to provide its service today to its end users, including an IP address, device IDs and other information about devices signed into the Netflix account across the household. Using this information, Netflix can identify when there’s persistent sharing taking place outside a household.

To enable the new sub accounts, the main account owner will receive an email with a code that they’ll need to use to verify the additional devices are a part of their household.

The cost for the extra non-household members in the test markets is 2,380 CLP in Chile, $2.99 USD in Costa Rica and 7.9 PEN in Peru. This is less expensive than a full Netflix account plan, but it’s also more than it previously cost to share someone’s Netflix account for free. Netflix notes the extra members won’t be paying for their account separately — the Netflix bill still goes to the main account holder. (If that person wants to charge their extra members for the new fees, that’s up to them to handle and collect.)

In earlier years, Netflix had largely turned a blind eye to the common practice of users sharing their Netflix accounts with other friends and family outside their immediate household. In fact, Netflix’s then-CEO Reed Hastings had once described account-sharing as a “positive thing” as it represented a chance for new people to discover what the service had to offer. But today, Netflix doesn’t have as much to prove — many of its shows, like “Stranger Things” or “Squid Game,” have become global entertainment sensations. Meanwhile, its real challenge is continuing to grow subscribers and revenues in the face of increased competition. The streamer’s year-end quarter, for instance, was particularly rough, having seen its lowest subscriber growth in years.

In theory, creating an avenue for extra members to move along the path to becoming full subscribers through the new transfer option could help boost Netflix’s paying user base over time. In the near term, however, it’s worth noting that the extra members will not be counted as subscribers while still using someone else’s account.

Though Netflix had been happy to embrace account-sharing in the past, its position today differs. Netflix’s current terms of service state that sharing is something that should take place within a household and not between households. The company also tested a feature last March that was described as a clampdown on password-sharing, signaling perhaps a wider crackdown was in store.

Netflix, however, doesn’t see this new test as a crackdown, we understand — just an option it wants to try out to see if it makes sense for members. It’s possible that user backlash could see the company shelving the idea to try something else instead. Or Netflix may decide to roll it out more broadly, if members adopt the feature. Time will tell.

“We recognize that people have many entertainment choices, so we want to ensure any new features are flexible and useful for members, whose subscriptions fund all our great TV and films,” wrote Chengyi Long, Netflix’s director of Product Innovation, in a blog post. “We’ll be working to understand the utility of these two features for members in these three countries before making changes anywhere else in the world,” Long added.