Leong’s Take on Netflix’s Controversial Password Sharing Restrictions
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Netflix has sparked controversy over proposed restrictions on account usage and sharing. Photo by IAM-photography /Getty Images/iStockphoto
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When Netflix began offering its streaming service in Canada in the early 2010s, it marked the beginning of a revolution in the way people consumed long-form video.
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For a small fee, customers had access to a huge library of films and television programs from many genres.
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Some studies even suggested that Netflix’s price was just low enough to discourage many people from illegally downloading entertainment.
Eventually, Netflix got so stuck in the world of streaming video that it began producing its own content, some of which was good enough to win Hollywood’s biggest awards.
Over time, this arrangement seemed too good to be true, and I quietly wondered how long that might last.
It turns out that Netflix isn’t happy with the status quo, according to a version of its revised password-sharing policy that was inadvertently posted on its website last week.
As first reported in the trade press, the company said the information is correct but should only be visible in a few countries where new account-sharing rules are being tested.
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Strict password sharing rules could make Netflix unusable for some customers
Should these severe restrictions be rolled out to more customers, they would render the service virtually unusable for many.
In short, members of a household could regularly use the company’s services in only one primary place of residence, with the devices having to check in there from time to time.
Devices elsewhere would be cut off.
This could pose a problem for people who share passwords with children who live away from home and attend school.
The new rules may also become an additional and unwelcome source of irritation for families whose children split their time between parents who don’t live together.
Though Netflix appears to allow customers to use the service from home, it would require obtaining permission — and that exception would be limited to a lean week.
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The Netflix logo is featured on a TV in a photo illustration. Photo by Mike Blake/REUTERS
Home away from home? No Netflix for you
The entertainment might be more complicated for Canadian snowbirds, who spend weeks and months at a time in warmer, foreign climates to escape winters at home.
Netflix’s new operating environment would also be annoying for frequent business travelers or digital nomads who might have an address somewhere for banking and tax purposes, but whose jobs allow them to work from almost anywhere on a permanent basis.
Of course, one would assume that Netflix could charge customers extra for the privilege of sharing accounts.
In fact, in places where new password rules are being tested, customers can pay a few dollars a month to share access with two more people.
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Only time will tell if customers think this is a good use of their money.
Long gone are the days when Netflix was the sole quality supplier of a seemingly endless selection of things to watch.
Netflix was once a one-stop-shop alternative to traditional cable TV, but video streaming services are now as fragmented as cable TV used to be, with each of Hollywood’s content giants re-appropriated their titles from competitors for distribution via internal services instead to stream.
Potential impact of the Netflix rules on the media industry
Of course, Netflix is free to impose any rules it likes to reclaim what it believes is lost revenue from illegitimate viewing.
He is also free to accept the consequences of his decisions, for better or for worse.
Ironically, the one-time conqueror of content piracy may be reviving the practice, as some current Netflix customers may be cut off in the future and unwilling to spend more to keep watching.
That would be bad for Netflix and the media industry at large.
As the streaming giant reconsiders how it offers and charges for services, the threat of unintended harm to its industry should encourage it to think harder about where to go next.
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