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Netflix begins ending password-sharing in U.S.

The crackdown comes after months of warning that Netflix would boot freeloaders off its service.

The crackdown comes after months of warning that Netflix would boot freeloaders off its service.

Netflix has issued a warning to freeloaders: The days of streaming content without paying at least $7 a month for it are over.

This week, Netflix began emailing customers with a warning that it would start cracking down on password sharing, offering subscribers the option to pay an extra $8 a month if they wanted to give someone outside their immediate household access to their account.

“A Netflix account is for use by one household,” a spokesperson for the streaming company said on Tuesday. “Everyone living in that household can use Netflix wherever they are — at home, on the go, on holiday — and take advantage of new features like Transfer Profile and Manage Access and Devices.”

Netflix says it will use a combination of information to determine the “home location” for a customer. That information will include Internet Protocol addresses and the types of device a customer uses to stream Netflix on the regular, but won’t include granular data like the precise location of a Netflix user at any given time.

Netflix is giving customers the option to set their own home location or let the company do it for them. The company is encouraging customers to check their account settings and revoke access to Netflix on devices they don’t recognize.

Some Netflix customers will be given the option to pay $8 a month to give a person outside their immediate household access to their account. Customers of Netflix’s two basic tiers — the $7 a month version that includes ads and the $10 a month commercial-free version — won’t have this option.

Freeloaders will be given the opportunity to download their watch lists and viewing history, and move that data to a new account.

For years, Netflix looked the other way at people sharing passwords beyond their household, with former CEO Reed Hastings saying the company found it to be good for their business.

Lately, it hasn’t been. Netflix has blamed password sharing for a drop in operational revenue and paying subscribers over the years, while trying to deflect from the fact that it spent tens of billions of dollars producing content that didn’t quite resonate with viewers (Squid Games being one of the rare exceptions).

Netflix began tightening account access in Latin America last year, and the move was blamed for a dip in subscribers during the company’s latest financial earnings report. In April, Netflix executives promised the move would deliver short-term pain for long-term gain, as it expects some customers will come back to the service and pay for their own accounts.

Netflix has 74.4 million paid customer accounts in the United States and Canada, and added 100,000 subscribers during the first three months of the year. The bulk of Netflix’s overall growth has been overseas; to date, Netflix has more than 232.5 million global subscribers.

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About the Author:

Matthew Keys

Matthew Keys is the publisher of The Desk and reports on the business and policy matters involving the broadcast television, streaming video and radio industries. He previously worked for Thomson Reuters, Disney-ABC, Tribune Broadcasting and McNaughton Newspapers. Matthew is based in Northern California, has won numerous awards in the field of journalism, and is a member of IRE (Investigative Reporters and Editors).