A “verify later” option let users keep streaming even if they didn’t have the code, but still, the test certainly raised eyebrows.

The move follows a growing series of password-sharing tests that began in 2021, when the streamer began asking users to verify their Netflix accounts using a four-digit code sent to the account holder. While the email stops short of warning users not to share their Netflix accounts without paying extra, it’s clear that the Netflix password sharing crackdown has officially begun. The email details how you can transfer a profile to a new account, as well as the option of paying to share your account. Starting now, Netflix will begin emailing users in the United States and other regions who are sharing their accounts with people outside their households. With all the big players fighting tooth-and-nail over new subscribers, streamers like Netflix aren’t giving password sharers a free pass anymore, and there are early signs that Netflix’s password-sharing crackdown is actually working in terms of adding paying users. Today, it’s up against the likes of Disney+, HBO Max, Paramount+, Peacock, and Apple TV+. Back in 2016, Hastings could afford to be cavalier about password sharing because the streamer faced little in the way of serious competition. The streaming landscape has also changed dramatically in the past few years. While Netflix hasn’t quantified how much revenue it may have lost from password sharers, a Los Angeles Times report estimates the practice may have cost streamer and pay-TV operators up to $9.1 billion in 2019, a figure that could balloon to $12.5 billion by 2024. Password sharing was partly to blame, the company said.

By early 2022, that growth had stalled, with Netflix reporting that its subscriber base had shrunk for the first time in a decade. Of course, Hastings’ 2016 comments came in the context of explosive subscriber growth for Netflix.

To be clear, Hastings wasn’t actually encouraging password sharing, but he didn’t seem interested in a crackdown, either, noting that account sharing “really hasn’t been a problem.” As recently as 2016, Netflix CEO Reed Hastings called the practice a “positive thing” because so many password sharers eventually got their own accounts. Netflix didn’t always have a problem with subscribers sharing their passwords.

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