Netflix Password Sharing Policy Update: What You Need to Know

Prepare to shell out for your own account in light of this change.

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Key points

• Netflix users commonly allow others to use their accounts.
• Going forward, that may not be possible without paying a higher fee.

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In January, many Netflix users were disappointed to learn that the cost of their service would be rising from $13.99 to $15.49 for a basic plan. At a time when inflation was hitting hard (and still is), that news wasn't the best. Now, Netflix is looking to make more changes that could hit users' wallets -- and limit a practice that's long been popular among Netflix subscribers.

The end of password sharing?

Netflix expressly states in its terms of service that users are not supposed to share their passwords with people outside of their household. But many users don't abide by that rule, and instead, share their passwords with family members or friends, giving those people free access to content. Meanwhile, some Netflix users split the cost of the streaming service so that two people in different households each pay half of the monthly fee and use the same account simultaneously.

But that practice may soon need to come to an end, or at least change. This week, Netflix announced that it's running a test that will prompt users to pay more to share their account with people living outside of their household. Initially, this test will run in Chile, Costa Rica, and Peru, but if it proves successful, it could easily reach the U.S.

Under this new feature, Netflix users will pay a modest fee to add sub-users (up to two) to their accounts. That fee will add to the cost of a standard plan, but will be less expensive than having to pay for a completely separate Netflix account.

Why the change?

The practice of password sharing causes Netflix to lose money on an ongoing basis. And so it was only a matter of time before the streaming giant took steps to try to limit or eliminate it.

Furthermore, Netflix insists that the practice of password sharing has limited its ability to invest in additional content. As such, it's exploring options for existing subscribers to share their passwords with people outside of their households without technically violating the company's terms of service.

Should Netflix fans be worried?

There's a good chance that at some point in the not-so-distant future, it won't be possible to share a Netflix password with an outside party without paying a fee. But is that something Netflix users should be upset about? Not necessarily.

The reality is that within the realm of streaming services, Netflix's price point is fairly competitive, even in light of its recent increase. And to be fair, users aren't supposed to share their passwords with people outside their household. So the fact that Netflix may finally be cracking down on that practice shouldn't come as too big a surprise.

In fact, it's easy to argue that Netflix is being more than fair with its new test program. And if it implements a similar setup for U.S. users, customers will have the option to add non-household-member subscribers at what could be a very modest price point.

Of course, seeing a recurring credit card charge for Netflix is not nearly as awesome as getting to use that service for free. But if the company makes it possible to share passwords and/or add users at a low cost, that's really not something to protest.