Here’s How Netflix’s New Password Sharing Rules Will Work After Crackdown

With US subscriptions slowing and content costs rising, Netflix (NFLX) – Get Free Report is looking for ways to bolster its bottom line.

With that reality in mind, the streaming service has revealed the first details of its plan to stop people from accessing content for free through password sharing.

While the company is still working out plans for the United States, the FAQ pages for countries currently in the midst of the crackdown – Chile, Costa Rica and Peru – have been updated to indicate that Netflix accounts will remain shareable, but only within a household time frame, according to Yahoo.

Users will now need to identify a “primary location” for their accounts and must connect to the primary location’s home wifi at least once every 31 days or risk the service being blocked.

Netflix will also use information such as IP addresses, device IDs, and account activity to determine whether connections originate from the primary location.

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

The primary account holder will need to verify the device with a temporary code. Once verified, the traveling member can watch Netflix for seven consecutive days.

Netflix crackdown plan

Netflix said it plans to step up its crackdown on password sharing, which has cost the streaming service provider billions in revenue each year.

The company said in a January 19 letter to shareholders that it plans to start rolling out paid sharing more widely later in the first quarter.

“Today’s widespread account sharing (more than 100 million households) compromises our long-term ability to invest in and improve Netflix, as well as grow our business,” the company said. “While our Terms of Service limit the use of Netflix to one household, we recognize that this is a change from members who share their account more widely.”

Netflix posted weaker-than-expected fourth-quarter earnings, while adding far more subscribers to its expansive streaming platform than Wall Street had anticipated.