2022 was the year that Netflix lost $54 billion overnight, and 2023 is the year that it will finally clamp down on password sharing in an attempt to monetize it.

We've known for a while now that the great password-sharing crackdown was coming, with reports first indicating that it was likely on the horizon back in April when Netflix released its first-quarter report for 2022 and the reality sank in that it had lost all those billions. This was on top of the other $50 billion in value that the company lost when it first rang in the New Year back in January and the news broke that it had fallen short of its subscriber goals, experiencing its worst 24-hour period on the stock market since 2012. Then, in an October newsletter to shareholders (as reported by Time), the announcement came that Netflix would officially start charging for password-sharing in early 2023.

Now, 2023 is almost here, and Netflix CEO Ted Sarandos has addressed the paid password-sharing change further, acknowledging to investors this month (via The Wall Street Journal): "Make no mistake, I don't think consumers are going to love it right out of the gate." According to Netflix, over 100 million viewers now access the service using borrowed passwords. The company has indicated that it will be looking at things like account activity, IP addresses, and device IDs in its effort to curb password-sharing.

How The Crackdown Might Work

Netflix already has different subscriber plans that dictate how many devices it will support at the same time. That includes a new $6.99 ad-supported tier for U.S. subscribers, which just launched in November, the basic $9.99 plan, the standard $15.49 plan, and the premium $19.99 plan, which respectively supports one, two, and four devices at the same time.

This just means that up to four screens in the same household can be using the same account simultaneously. You can also create profiles for different family members who are using the same account, but where it gets tricky is when people travel, have kids attending college, or split their time across two households with separate parents, for instance.

While Netflix hasn't announced pricing details for the U.S. yet, it has previously floated the possibility in surveys of a $3 add-on for password-sharing. It's also been testing the market in countries like Peru, Chile, and Costa Rica for plans that would allow adding up to two password sharers outside one's home. Subscribers wanting to log in from a new device have been prompted to enter a verification code sent to the main account owner. After jumping through that hoop enough times, some users might just bite the bullet and pay to share passwords or even start another new account, which would help Netflix recoup lost profits.

Five years ago, Netflix itself tweeted, "Love is sharing a password," but with it hemorrhaging subscribers, perhaps as a result of an unsustainable business growth model, something had to change. The new paid password-sharing model could have a ripple effect on how other streaming services like Disney+ handle the issue going forward.

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