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Netflix Is About to Lay Down a Stricter Policy That 'Won't Be a Universally Popular Move' The company announces it will be cracking down on account sharing in the coming months.

By Jonathan Small

Opinions expressed by Entrepreneur contributors are their own.

Freeloaders beware — Netflix is about to clamp down on unauthorized password sharing.

On the heels of its bombshell announcement that CEO and co-founder, Reed Hastings, will be stepping down, the streaming giant also revealed that it would crack down on people "borrowing" its service in the U.S. (i.e., people who mooch off of other people's accounts to watch Netflix).

"Today's widespread account sharing (100M+ households) undermines our long-term ability to invest in and improve Netflix, as well as build our business," the company said in a letter to shareholders.

In other words, sharing is not caring.

Indeed, Netflix blamed rampant account sharing as one reason for its massive subscriber loss last year.

So starting between now and March, Netflix plans to limit accounts to users within one household instead of allowing sharing between multiple external users. Account holders who want to share with users they don't live with will have to pay an extra fee.

Related: Netflix Announces More Layoffs

How will subscribers react?

The company has tested this stricter policy with some success in Latin America. But based on that experience, they concede that the decision to limit subscriptions to households will cause some cancellations in the short term.

"We expect some cancel reaction in each market when we roll out paid sharing," the shareholder letter reads.

In an earnings call earlier today, newly minted co-CEO Greg Peters, with Ted Sarandos, anticipated customer blowback.

"This will not be a universally popular move," he said.

But ultimately, the company believes shows like Stranger Things and Megan will win people over.

"It's the must-see-ness of the content that will make the paid sharing initiative work," Sarandos said.

Jonathan Small

Entrepreneur Leadership Network® VIP

Founder, Write About Now Media

Jonathan Small is an award-winning author, journalist, producer, and podcast host. For 25 years, he has worked as a sought-after storyteller for top media companies such as The New York Times, Hearst, Entrepreneur, and Condé Nast. He has held executive roles at Glamour, Fitness, and Entrepreneur and regularly contributes to The New York Times, TV Guide, Cosmo, Details, Maxim, and Good Housekeeping. He is the former “Jake” advice columnist for Glamour magazine and the “Guy Guru” at Cosmo.

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