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Netflix Ends $9.99 Ad-Free Option as It Bans Password Sharing

Its plan with ads is now less than half the cost of ‘standard’ plan

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Netflix is cracking down on sharing logins with people who don’t live under the same roof.

This stance from the streaming giant behind binge-worthy fare such as Grace and FrankieOzark and Stranger Things may leave you wondering whether other streaming services you routinely watch will require a separate account for all viewers at different addresses. 

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The move puts those sharing passwords or mooching off others on notice. But it also opens the door for streaming providers to adopt the kind of friends-and-family plans prevalent in the cellphone industry.

“I think Netflix gets the argument that you might be sharing a password with your sister in another state or introducing Mom and Dad to new content through password sharing,” Andrew Hare, New York-based senior vice president of research, global media and entertainment at business strategy firm Magid, said last year. 

But after the country’s largest streaming service began losing large numbers of customers for the first time since 2011, it sought other ways to grow. In March 2022, Netflix began testing two paid sharing features in Chile, Costa Rica and Peru that provided an early hint that password sharing in the United States was on borrowed time.

That time ran out in mid-May. The company started sending emails to password offenders May 23, indicating that “Your Netflix account is for you and the people you live with — your household.” Netflix defines a household as a “collection of the devices connected to the internet at the main place you watch Netflix,” though the company says you can continue to watch on the go or while vacationing in a hotel or second home.

Netflix determines which devices belong to a household through a combination of IP addresses, device IDs and account activity. The company says it does not collect GPS data to figure out the precise location of your devices.

You have options

If you’ve been watching on your adult son’s or daughter’s dime or allowing your college-age kids to enjoy programming on your account, you have some decisions to make. 

  • Extra member. Ask the primary account holder to sign you up as an extra member or create an extra member account for your child for an additional $7.99. The advantage: Any separate profile will live on, and ad-free streaming will continue. The disadvantage: The person on the account pays the entire bill, and the extra member can stream on only one device at a time.
  • New member. Become an independent account holder. Netflix with ads, the lowest price plan, is $6.99 a month. A profile can be transferred from the existing account.
  • No service. Save some money until the season changes. That could mean months without streaming, but no streaming service charges fees for starting or canceling. You can sign up again when you’re spending more time indoors, but your profile won’t be saved. 

If you like ad-free TV, Netflix has two other plans to choose from, now that the company has eliminated its Basic $9.99 monthly plan for new or returning subscribers that had allowed viewers to watch on one screen at a time. Current Basic subscribers can keep that plan.

The $15.49 Standard plan lets subscribers watch on two screens at the same time, including in high definition. The Premium plan, at $19.99 monthly, allows four screens simultaneously and downloads on six supported devices at a time, and includes Ultra HD (also called 4K) content where available.

To transfer a profile, follow these steps.

1. On a computer, sign into Netflix, hover over the icon at the upper right corner of the screen and select Account from the menu that appears. On a mobile device with the Netflix app, go to your profile, tap Account, and follow the next steps.

2. Scroll down to Settings and select Turn on profile transfers.

3. Choose Allow, or if you have second thoughts about doing a transfer, Go Back to Home.

4. A message appears that lets you know the profile transfer feature will not be enabled for two days. To start the feature instantly, click on the confirmation link sent to your email.

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If you choose to permit profile transfers, keep these things in mind: People using your account will be able to transfer a profile, including recommendations, viewing history, saved games, settings and more to a membership that this other person will pay for, Netflix says. Allowing such transfers doesn’t log any devices off your account, and no payment information will be transferred. Also worth noting: Profiles designated as Kids (children’s content) cannot be transferred.

You can review which devices have signed in to your account and knock off anyone who shouldn’t have access. If that happens, Netflix advises changing your password.

How common is streaming service sharing?

Nearly 2 in 5 Americans admitted to using another person’s streaming login, according to a February 2021 survey of more than 1,500 consumers commissioned by LendingTree. More than half of those said they streamed Netflix, compared with 31 percent for Hulu, 28 percent for Disney+ and 22 percent for Amazon Prime Video.

In the survey, most people “borrowing” account credentials were family members of the account holder. About a quarter were friends, 20 percent were significant others, and 5 percent were an ex. Almost a third confessed to secretly logging in without the subscriber’s permission.

Older adults are among the folks sharing streaming credentials with people who live outside their homes, but in smaller numbers compared with those younger, according to a 2018 survey of 1,000 streamers from Comparitech, a consumer website devoted to cybersecurity and privacy.

About a third of boomers and Generation Xers believe giving access to streaming content is ethical, compared with 76 percent of Gen Z streamers and 63 percent of millennials. The percentages were similar for those who believe receiving access is ethical.

Long-standing tolerance of password sharing

Netflix’s change reverses an open attitude about password sharing that has been around since the company began streaming in 2007. In an April 2022 letter to shareholders, Netflix acknowledged that password sharing helped fuel its growth by getting more people to use the service. It now sees those viewers as a big opportunity to reverse subscriber losses.

“Streaming services are certainly trying to adopt a one-account-per-household policy. And cracking down on password sharing is a big part of that,” says Paul Bischoff, editor of Comparitech.

Netflix probably knows who the serial abusers are, says Rich Greenfield, a partner at LightShed Partners media and telecommunications research company in New York. “My guess is they’ll go after the people who are the most rampant sharers first.”

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Beyond Netflix’s current 238 million paying subscribers, last year’s letter estimated the streaming service was being shared with 100 million more households. The number of subscribers grew steadily during the pandemic, but some started leaving in the first half of 2022. Netflix subsequently stemmed the losses and added customers. In fact, the company gained 5.9 million subscribers in its most recent financial quarter when password restrictions went into effect.

Netflix competitors eat into profits

During the pandemic, folks stuck at home increasingly turned to the likes of Amazon Prime Video, Apple TV+, Discovery+, Disney+, HBO Max, Hulu, Peacock, Paramount+ and YouTube TV, plus ad-supported video on demand (AVOD) services. Other streaming services have felt the pinch as people emerged from pandemic restrictions — HBO Max and Discovery+ combined May 23 to become Max, though Discovery+ is still available separately — but Netflix profits worldwide declined by more than $600 million in 2022. 

While losing accounts isn’t ideal for any streaming provider, the pressure on Netflix may differ from that of its rivals. Most notably, Amazon and Apple have other businesses more critical to their bottom lines.

“In some ways it is a win-win for the rival services because they will be looking to see if the password crackdown works and drives growth for Netflix, in which case they may consider a similar policy,” Magid’s Hare says. “Or if there is backlash and Netflix actually loses subscribers, they may stay away from the issue and be perceived as more consumer-friendly.”

The risk of sharing passwords

Apart from ethical or legal concerns, when you spread your password to outsiders, even people you trust, you’re taking a risk. People tend to use the same or similar passwords across numerous websites and services, though it’s a big security no-no.

“If you had someone’s password, you could log in to their Netflix, know the type of content that they’re watching, and more easily come up with a targeted phishing attack on them,” says Chandler Givens, former director of product management for consumer privacy at Avast digital security and now a consultant and an adjunct professor at Towson University in Maryland. “You’d say, ‘We know you watched Caddyshack 15 times in the past year. We think you’ll like this. Click here.’ And then you click here, and it’s malware.”

About a quarter of users worldwide have never changed their passwords, according to Avast research. And 83 percent of Americans use weak passwords that are easy to crack.

Price increases force choices

The greater number of streaming options coupled with price increases in recent years are causing consumers to look at their budgets, Hare says.

The average number of video-on-demand services that viewers subscribe to doubled between 2019 and the end of 2021, with the average monthly tab for such services increasing by about $10 to $23.58, according to Magid. And more people subscribe to four or more services than those who don’t subscribe at all.

“Consumers are hitting their limits with how much they are willing to pay and how many services they will subscribe to,” Hare says. Netflix knows its subscribers could switch easily. “Netflix does not want this to backfire and lose consumer goodwill.”

How to change a Netflix household

If you want to change or update your Netflix household location because you’re visiting a vacation destination for a prolonged period or moving, follow these steps.

1. Launch the Netflix home screen from a TV and open the menu.

2. Select Get Help | Manage Netflix Household.

3. Select Confirm Netflix Household or Update My Network Household.

4. Choose whether you want to receive a verification link sent via email or text. If the former, select, Yes, This Was Me. If the latter, tap the link. Select Confirm Netflix Household or Update Netflix Household.

5. If all went according to plan, you will see a confirmation on the TV screen and receive an email. Select Continue to Netflix to start watching.

Keep in mind, if you rely on multiple Wi-Fi networks, Netflix may associate your household with only one of those networks. Netflix may ask you to verify any devices connected to Wi-Fi networks from different providers or that have different external IP addresses.

If you limit your Netflix viewing to a computer or smartphone, the company says you don’t need to set up a Netflix Household for your account.

This story, originally published May 9, 2022, was updated to account for Netflix’s crackdown on password offenders, as well as plan changes and updated subscriber numbers.

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