Netflix is cracking down on password sharing in Australia, heralding a new phase in the evolution of streaming services.
Let's break down the new rules and unpack what this means for the future of entertainment.
What are the new rules?
Netflix will only let people share an account if they live in the same household — or pay an extra fee.
It'll ask people using someone else's account to get a new account of their own or stay on as a paid "extra member".
How much extra does password sharing cost?
It'll be an extra $7.99 per person.
But there's limits on how many outside people can add, depending on the plan you're on.
You can't add extra members if you're on the cheapest two plans.
You can only add one extra person if you're on the second most expensive plan.
If you are on the most expensive plan, can add two extra people.
If someone has the highest-tier plan and two extra members on their account, they'll be paying nearly $40 a month.
How will Netflix know if you're password sharing?
It'll require users to set up a primary location for their account and check to see if logins match that.
Previously, Netflix said it would work out if devices are part of the same household by using things like "IP addresses, device IDs, and account activity from devices signed into the Netflix account".
"When a device outside of your household signs in to an account or is used persistently, we may ask you to verify that device before it can be used to watch Netflix or switch your Netflix household," the company said.
Will this mean cancelled subscriptions?
Probably.
Greg Peters, Netflix's co-chief executive, says there was a dip in subscriptions when the rules were rolled out in other countries.
"We see an initial cancel reaction," he says.
"Then we build out of that both in terms of membership and revenue as borrowers sign up for their own Netflix accounts and existing members purchase that extra member facility for folks that they want to share with."
Comparison website Finder surveyed 1,110 Australians about their streaming habits, with 41 per cent of them admitting to sharing a password with someone they don't live with.
Of those, 43 per cent said they'd cancel their subscription if they had to pay extra for password sharing and 12 per cent said they'd boot the extra person off their account.
Just 23 per cent said they'd pay the extra fee to keep password sharing.
Wasn't Netflix pro password sharing?
You might remember this tweet from 2017 — not because it went viral at the time, but because it's been referenced by people disgruntled about password sharing.
"It was five years ago," Marc C-Scott, a senior lecturer in screen media at Victoria University, says.
"It was a very different media landscape five years ago, even two years ago to be quite honest."
Ramon Lobato, an Associate Professor at RMIT's School of Media and Communication, says this has been "on the cards for a long time".
"Streaming providers have long had the technical means to restrict password-sharing outside the household, based on IP addresses," Dr Lobato says.
"However, most have chosen not to do so for strategic reasons."
Why crack down on passwords now?
"During the early years of streaming in Australia, services like Netflix were in growth phase, and were focused squarely on building a subscriber base and strong brand awareness," Dr Lobato says.
"The aim was to get consumers into the streaming habit by any means possible – so providers were happy to put up with some revenue leakage for the sake of happy, engaged users.
"Now, as the streaming market has matured and subscriber numbers are starting to plateau, the strategies are shifting again.
"Providers are becoming more focused on maximising the revenue that they can generate from each customer.
"Hence the password-sharing crackdown; the aim is to encourage password-sharers to sign up for separate accounts or to move them to a higher payment tier."
Simon Weaving, a senior lecturer in communication and media at the University of Newcastle, points out that this coincides with some streamers' recent introduction of cheaper subscriptions with advertisements.
"That's added support," he says.
"It gives people who are really price conscious a way of continuing to subscribe."
Are we going back to the old days?
Dr C-Scott says that, when when Netflix first emerged as a streaming service, it was a much more cost-effective alternative to pay-TV.
Back when it was either free-to-air television or Foxtel and Austar, pay-TV was seen as a bit of a luxury.
"What's happened now is we have so many streaming services if you are subscribe to multiple, it almost becomes more expensive than Foxtel," he says.
"We've almost come back to that full loop."
Dr C-Scott says the binge-watching model isn't feasible for streaming services because he says, once a full series drops, "everyone's watched it in a week".
"They're starting to do that old broadcast model — releasing episodes once a week.
"It's a blend of old media practices."
The 'golden age' is over
"I think we've all gotta accept that this could go on being free forever is a bit of a dream," Dr Weaving says.
"The golden age of streaming has ended, has been amazing.
"Getting this all for free was incredible."
Dr Weaving says this is particularly relevant given the writers strikes happening in Hollywood at the moment — earlier this month, about 11,500 members of the Writers Guild of America went on strike, calling for higher pay.
Dr Weaving says we're now in the next phase of the evolution of streaming services.
"If we build profitable businesses, that money can flow back to the streamers, but also the creatives who write these shows," he says.
"These guys [are] working out how to make a sustainable dollar and hopefully pay the creatives what they deserve in the process."
He says some people are open to ad-supported streaming services because they understand that making shows and movies costs money.
And he points out that, unlike free-to-air TV, ads on streaming services can be more targeted and relevant to people based on the data companies have on individual viewers.
What's the future of streaming?
"I wouldn’t be surprised if there’s a few big mergers," Dr Weaving says.
Cheaper, ad-supported subscriptions could become more common.
And, now that Netflix is cracking down on password sharing, other streamers could follow suit.
Dr C-Scott says we'll start seeing more people opting in and out of their subscriptions.
He says this will make streamers re-think how they space out shows and movies each month to hold on to subscribers.
"We'll see streaming services become much smarter in the way they release content — they'll release it across a calender year," he says.
"That takes us back to the pay TV model."
Is this good or bad?
"Some will say it's bad, some will say it's good," Dr C-Scott says.
"If you binge content it's bad ... you'll have to wait three months."
He can see some people waiting until the entire series is finished before watching — which means they run the risk of spoilers on social media.
Dr Weaving says he hates ads, but the multiple plans streamers offer gives people the control over whether they want to sit through commercials or pay more.
"I think having choice is great," he says.
Dr C-Scott says it could also mean discussions about Australian-made film and shows.
He points to the reboot of Heartbreak High as an example of how global streaming services can produce and promote local content that becomes popular around the world.
"Australian content is for a global audience and that's the way we should perceive it," he says
