How the Netflix password sharing crackdown works — what you need to know

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The countdown to the big Netflix password sharing crackdown is on, and it just rolled out in four new regions. So, it's high time we understood what Netflix is doing. Over the last year, this titan of the best streaming services has revealed that millions are (either wittingly or unwittingly) breaking the rules. And we just learned of a new rule for how Netflix will be "approving" devices, which we've added below.

Yes, the habit of sharing your Netflix login with friends or family is actually against Netflix's terms of service. How so? According to Netflix's own site, "A Netflix account is for people who live together in a single household." This will make some want to say "define 'household?'"

After Netflix's password sharing crackdown expanded to Canada, New Zealand, Portugal and Spain (with testing having originally begun in Peru, Chile and Costa Rica), Netflix has become more cagey about how it works. And in recent earnings, the service has basically set a timer for the worldwide release of this new project.

Fortunately, we know a bit about could will work in its wider release, based on existing testing and Netflix's own FAQ's.

As you may have gleamed from above, this is all about location. Netflix is trying to make sure its passwords are only being used within the same household, and by that it means the premises you use.

Netflix's own help section (as our sister site TechRadar spotted) previously included a brief explanation for how it "detects devices within a household." The service claims it uses "information such as IP addresses, device IDs, and account activity from devices signed into the Netflix account." Here's an example of how it looks:

O no. Netflix doing the purge?!? pic.twitter.com/XXlHtfgfsyMarch 9, 2021

To break that down, an IP address (often seen as a series of period-separated numbers such as "192.0.2.1"), is a way to identify your device's location both on your network and on the internet. Some use one of the best VPN services to obfuscate their IP address to watch content (often on Netflix) they're not supposed to that's meant for those in other countries. As for Device IDs? Mobile devices bear a unique and anonymized set of numbers that is used for many a reason.

The most recent update to the Sharing your Netflix account page takes away all such technical references and states "A Netflix account is meant to be shared in one household (people who live in the same location with the account owner). People who are not in your household will need to sign up for their own account to watch Netflix."

Previously, a since-erased update to these rules (found on January 31st), in the Costa Rican version of the help page, read "To ensure that your devices are associated with your primary location, connect to the Wi-Fi at your primary location, open the Netflix app or website, and watch something at least once every 31 days."

By collecting all of this data, Netflix can basically identify a series of devices it believes are a part of a single household. Any device that doesn't fit? About that...

Netflix has offered users in Latin America an ability to "add a home" to their Netflix account, basically a way to keep doing what they're doing, except paying Netflix more — the one thing people don't want to do.

Netflix was charging various amounts $2.99 (around CAD $3.99 / £2.50 / AU$4) per month per home in the Dominican Republic, El Salvador, Honduras and Guatemala.

Its February 2023 expansion added new pricing of "CAD$7.99 a month per person in Canada, NZD$7.99 in New Zealand, Euro 3.99 in Portugal, and Euro 5.99 in Spain." That Canadian pricing translates to about $6 USD, at the time of publishing.

Users can add up to three extra homes — that's on the Premium $20 per month tier — but Basic plans are limited to one extra home and Standard plans cap at two.

While this may change soon, Netflix currently offers a device verification method for those who believe they were erroneously flagged. Previously Netflix said it will email a four-digit verification code to the account holder. The person using the account will then have to input that code in the next 15 minutes.

This is not a one-and-done situation, as Netflix notes "Device verification may be required periodically." Which is basically saying that repeated use will get very annoying. Netflix is going to be a bit strict, as its FAQ states "As long as the device being used to watch Netflix is using the internet connection in the primary account owner's household, we will not require verification."

But what about vacationers? And people on the subway? Well, Netflix believes it won't be stopping them. Its FAQ page previously noted "If you are traveling or live between different homes, we want you to be able to enjoy Netflix anywhere, anytime. If you are the primary account owner (or live with them), you shouldn’t need to verify your device to watch Netflix."

The words "shouldn't need" loom large, though. And, unsurprisingly, this is where device verification will come into play again, as Netflix notes "If you are away from the Netflix household for an extended period of time, you may be occasionally asked to verify your device."

Of course, all of this text has been removed. Netflix now says "Members can still easily watch Netflix on their personal devices or log into a new TV, like at a hotel or holiday rental."

Netflix's big strategy, it seems, is about making it very annoying to share an account. It's as if someone from Netflix will be laughing as you ask your parents for the six-digit code, and the situation will push your parents to ask "wouldn't you rather just pay a little more?"

All of this, as you might gather, means that Netflix is ready to irritate some subscribers in order to get more money from others. So, while Netflix's social media account once tweeted "Love is sharing a password," that's clearly changed.

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Henry is a managing editor at Tom’s Guide covering streaming media, laptops and all things Apple, reviewing devices and services for the past seven years. Prior to joining Tom's Guide, he reviewed software and hardware for TechRadar Pro, and interviewed artists for Patek Philippe International Magazine. He's also covered the wild world of professional wrestling for Cageside Seats, interviewing athletes and other industry veterans.