Netflix is cracking down on password sharing in new trial that charges subscribers

Netflix has begun testing a new feature that would charge people to add multiple profiles to an account.

The scheme is being trialled in Chile, Costa Rica and Peru, but it is unclear so far if it will be rolled out in other countries.

The new charge to subscribers will be the strictest crackdown the company has made, following its subtle curb on password sharing last year when it introduced two-step verification.

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    What is the new feature charging subscribers?

    The new feature will charge subscribers who share their accounts for up to two people outside their household.

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    Subscribers will be charged around $2.98 a month in Chile, $2.99 in Costa Rica and $2.12 in Peru.

    The end of Netflix password sharing suggests another shift in the company’s strategy - with it looking more towards existing customers rather than new subscribers to increase the company’s revenue.

    In a statement, Chengyi Long, Netflix’s director of product innovation, said Netflix has “always made it easy for people who live together to share their Netflix account”, allowing people to create separate profiles on a single subscription.

    But, “accounts are being shared between households – impacting our ability to invest in great new TV and films for our members,” Long said.

    What else has Netflix changed recently?

    Netflix announced it would increase the price of its most popular subscription from $14 to $15.50 in January.

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    It is the second price increase in two years.

    It followed just after the company revealed its forecasts saw just 2.5 million new subscribers joining the streaming service in the first quarter of 2022 - the lowest number in years.

    Why are the changes being tested?

    Netflix has been competing with streaming platforms that have emerged and debuted over the last few years, such as Disney+ and HBO Max.

    However, it still remains the most popular streaming platform.

    Streaming platforms including Netflix have been keeping their prices low to entice new subscribers, analysts have said - though the prices we see now may not last for long.

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    Media executives have spoken up about the streaming wars that have emerged and the disadvantages it has brought to media companies who for some time were used to getting profit from high cable costs and TV advertisers particularly because of password sharing.

    Tom Rutledge, chief executive of Charter Communication, a major US cable company, told CNBC in 2020: “Media companies have had a fabulous distribution system for decades.”

    But now, “It’s just too easy to get the product without paying for it.”