Netflix alerts telecoms groups over looming account-sharing crackdown

Netflix has held talks with UK telecoms groups that carry the streaming group’s service ahead of a crackdown on account sharing expected later this month.

The US group, which has said the free use of its platform has hit its ability to invest in new TV and films, plans to start warning customers over account-sharing violations in the coming weeks, according to people familiar with the situation.

Telecoms groups that use Netflix as part of bundled TV content have held meetings in the past week over the planned warnings, people familiar with the talks said. Companies such as Sky, BT, Virgin Media and TalkTalk offer Netflix as part of bundled deals on broadband and TV content.

But those close to the talks said there was a risk of complaints from some subscribers, many of whom have grown accustomed to sharing their account details with family and friends, activity to which the company had previously turned a blind eye. One person described it as being a “good partner” to groups that offer the service as part of their subscriptions.

Telecoms companies’ call centres are likely to field questions and complaints once the plans are enacted, according to a person familiar with the issue, which has meant that they have needed close co-operation with Netflix.

The company had sought to ensure its partners were kept informed about its plans as they progressed over the past few months, one person close to the talks added.

Once the account-sharing crackdown begins, customers will be encouraged to set a primary location that will mean anyone who lives in their household can use their Netflix account, according to the people.

If it finds the account is being used outside that primary location, the account holder will be emailed about the extra usage, with “interstitials” related to the matter inserted into the start of programming.

The warnings will roll out across most of its major markets, including the US and UK, in a move to stop non-subscribers from freely using customers’ passwords and instead turn them into paying customers.

Netflix in April estimated that more than 100mn households around the world shared accounts with other users.

The company was forced to delay the planned rollout of its crackdown on account sharing from the first to the second quarter of the year.

After clampdowns in Canada, New Zealand, Spain and Portugal in the first quarter, Netflix said in a letter to shareholders that its new “paid sharing” service — in which customers share their account with people outside their household for a fee — had resulted in a “cancel reaction” that led to lower membership growth.

But Netflix said that after the initial drop-off, subscribers soon started adding “extra member” accounts, boosting revenues and persuading management that it was taking “the right approach”.

In Canada, the paid subscriber base was now higher than before the launch of the paid sharing service, the company said.

The streaming service is seeking to improve profitability in the face of rising competition from rivals such as Disney and Apple. Netflix declined to comment.

Additional reporting by Christopher Grimes in Los Angeles