The company says that over 100 million Netflix viewers consume the service using passwords borrowed from friends and family. This arrangement will be put to an end starting in 2023, with the company asking people to pay for sharing accounts. The United States may be used as the testing ground for the decision – the company says that the change will begin rolling out in the country early next year.

Netflix has already started testing additional fees for password sharing in a few Latin American countries, charging around $3 extra. The actual subscriber in these countries has to provide a verification code to anyone outside the household wanting to access the account. The code obviously doesn’t come free and Netflix repeatedly throws prompts at the user outside the household asking for the code.

A similar implementation could be seen in the US in 2023 once the changes go through. Netflix is considering charging account sharers a fee that’s only slightly below the $6.99 ad-supported plan, encouraging borrowers to sign up for their own subscriptions rather than requesting the actual owner to pay for them. To ensure people don’t find their way around the password-sharing rules, Netflix will use IP addresses, device IDs, and account activity.

Why Netflix is ending password sharing

Netflix has long known the effects of password sharing on its profits but it’s been delaying any moves because it was worried about angering consumers, according to a Wall Street Journal report. Then the pandemic struck, leading to a surge of subscribers in 2020 and Netflix resultantly avoided addressing the problem. But now that the service’s been losing subscribers, it finds itself in a sticky situation.

Earlier this year, Netflix announced in its Q1 2022 earning report that it lost 200,000 subscribers due to fierce competition and the war in Ukraine. The company had suspended services in Russia resulting in the loss of 700,000 subscribers. The second quarter was even worse, with the company losing nearly 1 million subscribers, the biggest loss in company history. Following the report, Netflix’s stock tumbled 26%, erasing about $40 billion of stock market value.

2022’s third quarter of this year brought much-needed relief, though, with the company reporting the addition of 2.41 million global subscribers. However, Netflix CEO Spencer Neumann, said during the company’s earnings call that they’re “still not growing as fast as they’d like,” which brings us to the decision to kill password sharing.

It remains to be seen to what degree the move will benefit Netflix — or if it will only encourage cancellations.