Netflix banned sharing account password: how violators will be punished

With US subscriber growth slowing and the cost of content rising, Netflix (NFLX) is looking for ways to increase its profits. The company implements measures to protect against password sharing, reports TheStreet.

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Password sharing is the process when several users watch Netflix from different devices through one account.

The streaming service has revealed the first details of its plan to prevent people from accessing content for free by exchanging passwords.

Netflix said it plans to step up its fight against password sharing, which costs the streaming service provider billions of dollars annually. The company said in a letter to shareholders dated Jan. 19 that it plans to begin a wider rollout of the paid exchange later in the first quarter.

"Today, widespread account sharing (over 100 million households) undermines our long-term ability to invest in and improve Netflix and build our business," the company said.

Netflix posted weaker-than-expected fourth-quarter earnings while adding many more subscribers to its expanded streaming platform than Wall Street had forecast.

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Users will now be required to provide a "primary location" for their accounts and will need to log in via their primary location's home Wi-Fi at least once every 31 days or the service will be blocked.

Netflix will also use information such as IP addresses, device IDs, and account activity to determine if you are signed in from your primary location.

If someone logs into the account from a device that is not part of the primary location, or the account is constantly accessed from another location, it will be blocked.

The primary account holder will need to verify the secondary device with a temporary code. Users will need to enter the code within 15 minutes. After such a check, a user who, for example, travels, can watch Netflix for seven days in a row.

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“When a device outside of your household is signed into an account or is in constant use, we may ask you to verify that device before it can be used to watch Netflix. We do this to confirm that the device using the account is authorized to do so. Netflix will not automatically charge you if you share your account with someone who does not live with you,” the company said.

Essentially, this means that users may still be able to exchange accounts and thereby exchange passwords, although Netflix may block or fine the owner of an additional account if it suspects misconduct, reports IndiaToday. Netflix explains that it sends verification requests to "make sure the device using the account is authorized to do so." This means it's mostly a security measure, although the company could start using the same method to verify users who use the same Netflix account.

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Otherwise, the company encourages users to get their own customized plans. If users still want to use the same account, they can create multiple profiles. However, this option is only available with expensive plans.

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