Netflix, which broadcasts shows such as Ozark featuring Jason Bateman (pictured), has never said it would take any legal action in such cases (Netflix)

Netflix, which broadcasts shows such as Ozark featuring Jason Bateman (pictured), has never said it would take any legal action in such cases (Netflix)

Netflix plans to formally end password sharing in early 2023 after turning a blind eye to the practice for years, according to a new report.

The streaming service will begin the clampdown in the U.S. and expand it gradually, per The Wall Street Journal.

Netflix says that 100 million people watch its service for free using either a friend or family member’s password. The streamer could reportedly rake in an estimated $721 million (£596 million) in extra revenue next year by cracking down on the method in the US and Canada.

Though Netflix expressly forbids password sharing, it has long allowed it to go unchecked amid fears that it could alienate customers who now have more streaming options than ever, including free platforms such as Amazon Freevee and on-demand services from public broadcasters in the UK. With competition on the rise, Netflix introduced a cheaper basic subscription with ads in Nomvember that costs £5 per month.

Rumblings of an official crackdown follows news that sharing streaming passwords could be illegal in the UK.

The Intellectual Property Office (IPO) – a government agency that oversees patents and trade marks – said on Tuesday the practice broke copyright law.

The IPO has since removed the reference to password sharing in its guidance on the Government website.

The original IPO page, saved by the Internet Archive here, included “password sharing on streaming services” in a list of things that “break copyright law” compiled with assistance from Meta.

The newly updated page drops the mention entirely, leaving things such as only “pasting internet images into your social media without permission” and “accessing films, tv series or live sports events through Kodi boxes”.

But despite this, the Government’s initial advice still appears to stand. An IPO spokesperson confirmed to The Telegraph that password sharing was a breach of copyright law and could even constitute fraud.

“There are a range of provisions in criminal and civil law which may be applicable in the case of password sharing where the intent is to allow a user to access copyright protected works without payment,” the spokesperson said.

“These provisions may include breach of contractual terms, fraud or secondary copyright infringement depending on the circumstances.”

Will Netflix take legal action against password sharers?

Despite these strong words, ultimately it’s the courts that will decide if password sharing is truly illegal or not. And that assumes that any streaming company would risk taking legal action against a person doing that.

For its part, Netflix has never said it would take any legal action in such cases. As recently as 2017, the streaming giant’s own social media account was tacitly endorsing the following:

It’s fair to say Netflix’s attitude to password sharing has changed considerably in the intervening five years, with plans to charge a levy to those who share logins beyond their households. Netflix says it uses information such as IP addresses, device IDs and account activity to detect how many homes are tuning in to its service.

However, it seems unlikely that the company would risk the PR backlash of legal action, even if deliberate password sharing could be proven beyond doubt (as opposed to being blamed on a password breach).

Historically, fining users for piracy has proved both expensive and bad publicity for the companies involved, even if Topware Interactive was able to extract £16,000 from one woman for the piracy of its Dream Pinball 3D game.

The contentious practice of mass mailing those suspected of piracy and fishing for cash payments to prevent court action is less prevalent than it was in the early 2000s, but is still occasionally used. Last year, Virgin Media customers were offered the chance to settle possible legal action for downloading the Netflix movie Ava with a payment of just over £800.

In the court of public opinion, such heavy-handed legal action often proves counterintuitive, even for active piracy — something much of the public has little sympathy for. Going after streaming subscribers who share an expense with friends and family during a cost of living crisis would be a very bad look, no matter how much companies may lament the potential lost revenue.

Ultimately, streamers may well prefer the quiet life of banning accounts for breaking terms of service, rather than arguing a crime has occurred and risking severe negative publicity.

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