Netflix says it plans to halt free password sharing before April

Netflix will begin blocking subscribers from sharing their account passwords with people outside of their household in the coming months, the video streaming service suggested in a letter to shareholders last week. 

The streaming giant first hinted at plans to restrict Netflix password-sharing between households last spring.

Netflix piloted a paid-version of account sharing in Latin American countries, where subscribers could add a “sub-account” for an additional $3 a month. 

Now, it plans to roll out paid sharing “more broadly later in Q1,” which ends on March 31st. 

Netflix expects cancellations

• “From our experience in Latin America, we expect some cancel reaction in each market when we roll out paid sharing, which impacts near term member growth,” Netflix said in its letter. “But as borrower households begin to activate their own standalone accounts and extra member accounts are added, we expect to see improved overall revenue.” 

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Why does Netflix want to end password sharing? 

• Netflix currently allows multiple customized profiles to be created under a single account, but the profiles are intended to be used by members of the same household. 
• "While these have been hugely popular, they have also created some confusion about when and how Netflix can be shared,” Chengyi Long, Netflix’s director of product innovation, wrote in a statement announcing the paid share feature last year.  “As a result, accounts are being shared between households - impacting our ability to invest in great new TV and films for our members."

How will Netflix detect password sharing? 

Netflix says it uses IP addresses, device IDs and account activity to detect devices within a household. Under its current policy it sometimes asks users to verify a device if that device is frequently used outside the household. 

Netflix's recent pricing changes

• The announcement of paid sharing’s expansion also comes one year after Netflix raised its prices, boosting the basic $8.99 monthly plan to $9.99 in the United States.
• It also rolled out a $6.99 monthly subscription for a version of the service with advertisements in November. 

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Contributing: Brett Molina, USA TODAY