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[Amie Mandy]

A few days ago we told you that Netflix had put the kibosh on password sharing in the U.S. Netflix wants each account to consist of one household and anyone living in another household must either pay for their own account or have another account pay for them. No longer can someone living in a separate household share a Netflix password and get the streaming service for free.

Netflix most likely realized that it would be getting some cancellations after cracking down on password sharing. It probably figured that whatever business it lost would be made up by those willing to pay for their own account, or from those willing to pay for a Netflix user who they previously shared their password with. But it appears that some long time Netflix subscribers are the ones saying goodbye to the streamer.

Earlier this year during an earnings conference call, the company said, "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. But as borrower households begin to activate their own standalone accounts and extra member accounts are added, we expect to see improved overall revenue, which is our goal with all plan and pricing changes."

So there you have it. Netflix expects that even after the cancellations, it will see revenue grow as those at risk of losing their Netflix connection pay up for it. or extra member accounts are created. The extra member accounts depend on the largesse of the account holder and that might be hard for Netflix to control. But getting those who were riding the back of password sharing to pay for their own accounts will depend on producing compelling content and that is an area where the video streamer might need more work.

As of the first quarter of this year, Netflix had 232.5 million paid subscribers world wide according to Statista. In the U.S., that figure is believed to be 74.4 million paid subscribers. During the first quarter of 2023, Netflix reported revenue of $8.162 billion. Future revenue numbers will tell us whether Netflix made the right decision about password sharing.

The goal is to get the freeloaders to become new paying customers, but not everyone is willing to cough up the cash. "My partner and I are just not going to have Netflix from now on," Rose says. She's frustrated at being asked to pay more for streamers that are making less television for her to watch.

It's a big change in policy and tone for a streamer that once promoted password sharing as part of its marketing strategy. So far, it has spelled more money and subscribers for Netflix, according to its latest earnings report, but it's also angering and alienating its user base, some of whom are canceling the service outright. Here's what you should know about the policy, and why it's probably here to stay (and may even spread to other streamers).

You can set your household up manually or Netflix will do it for you, based on IP (internet protocol) address information for your account. If someone is using your account a few states away, they're likely to be bounced from the platform.

If you travel frequently, have a second residence or need to use Netflix outside your home regularly, there are ways to make sure you don't lose access to your account. But these workarounds have limits and can be multi-step processes. If you have a second home, you need to first open Netflix on a mobile device on the primary WiFi network, and then secondary location, at least once a month to maintain access. If you travel to different places frequently, Netflix offers codes to allow you to log in on new TVs in hotels or rentals, but users report obtaining too few codes per month, which can be limiting for professions like travel nurses, salespeople or writers.

Others have already canceled, or declined to pony up for a new account after losing access to someone else's. Brayden Simms, 41, a copy editor from Boulder, Colorado, canceled his account. "I just feel like everyone is struggling for cash right now, and we are all looking for ways to cut back and live a more sustainable lifestyle. Meanwhile, the number of monthly subscriptions we are expected to pay is going up and up."

On Wednesday, Netflix released its second-quarter earnings for 2023 and led by touting gains resulting from the password crackdown. "Revenue in each region is now higher than pre-launch, with sign-ups already exceeding cancellations," Netflix's letter to shareholders said, noting 5.9 million subscribers were added in countries where the company introduced the password crackdown. But some of that growth can be attributed to the introduction of cheaper, ad-supported tiers of the service.

It might just happen, because big business is as susceptible to peer pressure as anyone else. After streamer Max (formerly HBO Max) began excising titles from its library last year as a cost-cutting measure, others quickly followed, including Paramount+, Disney+ and Starz. Netflix executives once swore they would never put commercials on the platform, but after ad-supported tiers were successful on other streamers, Netflix added its own.

Seventy-one percent of people said they would consider sharing a password with a spouse or partner, according to a SurveyMonkey Audience poll shared exclusively with CNET and to be published later this week. More than a third of respondents were willing to quit a streaming service, such as Netflix or HBO, if the company used artificial intelligence to stop password sharing.

Other data in the survey bears that out. People who knew they had previously been caught up in a data breach were even more likely to be willing to share their bank passwords -- at 46 percent -- than people who said they hadn't had data breached. Only 41 percent of people who didn't think they'd lost data in a breach said they would share bank passwords.

We've just found too many good reasons to share our passwords. Why pay for Netflix and Hulu when you can just pay for one service while a friend or family member pays for the other one? Swap those passwords and you're good to go. And other behaviors are just convenient, like letting everyone in the family use the same Target or Amazon account.

Our unstoppable desire to share serves as a great example of the ways cybersecurity tips often don't make sense in the everyday lives of internet users. Those tips can be onerous, like typing in an extra code from an authenticator app or using physical tokens to log in. Who's got time for that when you want to binge watch The Magicians?

What's more, big data breaches like the ones that hit Equifax in 2017 and the US Office of Personnel Management in 2015 don't happen because we share our email passwords with our spouses. That makes it hard to see why we should bother.

Only 16 percent of people polled by SurveyMonkey said they actually share their passwords. It might be a lot more than that, which makes a lot of sense. It's convenient, even it if isn't safe. And, of course, it can raise the sometimes fraught question of whether you trust your spouse or partner.

Even if you have no reason to worry about your significant other's trustworthiness, it's still a bad practice. Here's why: It doubles the number of people who could expose your password to hackers.

Sharing your password also makes it harder for online services to protect you with special software that tracks your typing and mouse movement, which alerts them when a stranger enters your password.

The practice is particularly unsafe because so many -- just over half, according to SurveyMonkey -- reuse passwords. You might think you're just sharing your Amazon password, but you've forgotten it's also your work email password.

"Today, we use passwords for both business and personal use, and because so many people share or reuse the same passwords, it puts both personal and business data at risk," said Brent Williams, chief information security officer at SurveyMonkey.

Sharing the password for other personal accounts isn't appealing to everyone, but 31 percent of respondents said they would share social media passwords and 29 percent said they would share personal email passwords.

Companies know sharing is a problem, which is why it makes sense for them to encourage safer sharing. For example, Amazon allows you to share your Prime benefits with another adult, and add children, through Amazon Household. You get to keep your own password.

Finally, password sharing would be safer if users were more careful about not reusing passwords. The solution to this one involves more work for you: use a password manager. That's an app that helps you create and store unique passwords for all your accounts.

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Products can typically be characterized along two dimensions: excludability and rivalrousness. The excludability dimension considers the ability of a seller to restrict access to their product, while the rivalry dimension refers to the cost of providing the product to another user. We can analyze different types of products as these characteristics are adjusted. The most common types of goods are private goods, artificially scarce goods, common resources, and public goods.

In addition to profitability, Netflix's efforts to stop password sharing are likely also driven by customer growth. As the most popular streaming service in the United States, Netflix has faced challenges in attracting new members. With a perception that everyone who wants to join has already done so, the company needs to be creative if it wants to expand its customer base. This is why it introduced a cheaper, ad-supported plan in November. While profitability is a key factor, increasing its customer base is also a priority for Netflix.

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