Netflix warns telecom companies of imminent raid on account sharing

Netflix has held talks with UK telcos that offer the streaming giant’s service ahead of a crackdown on account sharing later this month.

The US group, which has said that using its platform for free has affected its ability to invest in new series and films, plans to protect customers from violations in the coming weeks, according to people familiar with the situation warn against sharing accounts.

Telecom groups that use Netflix As part of the bundled TV content, meetings on the planned alerts have taken place over the past week, people familiar with the talks said. Companies like Sky, BT, Virgin Media and TalkTalk offer Netflix as part of bundled offers for broadband and TV content.

But those close to the talks said there was a risk of complaints from some subscribers, many of whom have become accustomed to sharing their account details with family and friends, an activity the company had previously turned a blind eye to. One person described it as a “good partner” for groups that offer the service as part of their subscriptions.

Telco call centers will likely handle questions and complaints once the plans go into effect, according to a person familiar with the matter. Therefore, close cooperation with Netflix was required.

The company has been trying to ensure its partners are kept up to date on the progress of its plans over the past few months, added a person involved in the talks.

Once the account sharing crackdown begins, customers will be asked to set a primary location, which means anyone living in their household can use their Netflix account, respondents said.

If the account is found to be used outside of this primary location, the account holder will be notified of the additional use via email, with “interstitials” related to the matter being inserted at the beginning of programming.

The warnings are being rolled out in most major markets, including the US and UK, to prevent non-subscribers from freely using customers’ passwords and instead turn them into paying customers.

Netflix estimated in April that more than 100 million homes around the world shared accounts with other users.

The company was forced to do this delay the planned rollout of its crackdown on account sharing from the first through the second quarter of the year.

After strict measures in Canada, New Zealand, Spain and Portugal in the first quarter, Netflix said in a letter to shareholders that its new “pay-sharing” service — where customers share their account with people outside of their household for a fee — led to an “abort response” that led to lower membership growth.

But Netflix said that after the initial drop, subscribers soon began adding “additional member accounts,” boosting revenue and convincing management it was taking “the right approach.”

In Canada, the paid subscriber base is now higher than before the introduction of the paid sharing service, the company said.

The streaming service is striving to improve profitability in the face of increasing competition from rivals such as Disney and Apple. Netflix declined to comment.

Additional reporting by Christopher Grimes in Los Angeles

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