Netflix has revealed details of how it is planning to limit account usage to a single household, starting in some regions in Latin America. The company has previously ignored account sharing, seeing it as a way of promoting adoption. Now it is looking to persuade people that live outside an account household addresss to get their own subscriptions. Netflix risks irritating legitimate users in a bid to boost subscriber revenue and profits.
Netflix updated its customer support pages for Chile, Costa Rica, and Peru, revealing how it will identify and seek to limit usage outside the account-holding household. The information was briefly published for users elsewhere. Plans for wider implementation have been indicated but this is the first indication of how they might be applied.
The company defines a household as those that live with the account holder in their primary location.
In a world of complex relationships, extended families and regular travel, some might find that relatively restrictive. However, it is consistent with common statistical definitions of a household.
For instance, the Office of National Statistics in the United Kingdom currently defines a household as one or more people, not necessarily related, living at the same address who share cooking facilities and share a living room, sitting room or dining area.
It is also consistent with the subscription model for traditional pay-television packages, which are typically tied to a household address.
Netflix will require users to identify a primary location for all accounts that live within the same household.
To ensure that devices are associated with the primary location, users will be required to connect to the Wi-Fi at the primary location, open the Netflix application or web site, and watch something at least once every 31 days.
This will create a trusted device that can be used to watch Netflix for a month when away from the primary location.
Devices that are not part of the primary location may be blocked from watching Netflix.
Netflix recommends ensuring that the device is not connected to a virtual private network, proxy or any unblocking device.
People who are not part of the same household will need to use their own account to watch Netflix.
To share Netflix with someone that does not live at the same address will require adding an extra member to the account, at extra cost. They will be able to transfer a profile from the existing account, including viewing history and recommendations.
It is not possible to add extra members to packages with Netflix included or billed by third parties.
Netflix says that it will use information such as internet addresses, device identifiers, and account activity to determine whether a device signed into the account is connected to the primary location.
When someone signs into an account from a device that is not part of the primary location, or if the account is accessed persistently from another location, that device may be blocked from watching Netflix.
In that case, a user that is travelling may request a temporary code to access Netflix for seven consecutive days.
Alternatively, they may use a television in their current location to update their primary location.
Netflix has previously announced plans to start rolling out its account management more broadly. It estimates that account sharing is widespread, used by more than 100 million households within its 230 million subscribers.
The approach adopted by Netflix will be watched carefully by other online video subscription services. Investors and analysts will be interested in how it affects the bottom line in quarterly numbers.