Netflix NFLX revealed the first details of its password sharing crackdown.
Netflix will require users to identify a primary location for all accounts within the same household. The company said that it would use information such as IP addresses, device IDs, and account activity to determine whether a device signed into the account is connected to the primary location.
If someone signs into a account from a device that is not part of the primary location, or if the account is accessed persistently from another location, it will likely be blocked.
To bypass this, the main account holder will need to verify the device through a temporary code. The traveling member can watch Netflix for seven days in a row. It is not clear if a temporary code can be requested after the 7 day period to avoid paying for an additional account.
In its quarterly letter to shareholders, Netflix said it would be intensifying its push to combat password sharing.
We expect to roll out paid sharing more broadly in Q1, later in the year. Today s widespread account sharing of 100 M households undermines our long term ability to invest in and improve Netflix, as well as build our business, the company said.
As the competition within the streaming space increases, Netflix will rely on its ad-supported tier to lift profitability, as well as a crackdown on password sharing. In Q4 Netflix reported net additions of 7.66 million, above company guidance of 4.5 million, as well as a slew of high-profile and record-breaking content releases, including Glass Onion, Troll, All Quiet on the Western Front, My Name is Vendetta, and Wednesday. The company has announced co-CEO and co-founder Reed Hastings will step down from his role as CEO of the company, with COO Greg Peters joining current Netflix co-CEO Ted Sarandos in that role. Hastings will now serve as the company's executive chairman.
Netflix's stock has gone up 55% over the past six months, with a 20% gain in January, far outpacing the Nasdaq Composite's 3% dip.
Alexandra is a senior entertainment and media reporter at Yahoo Finance. Follow her on Twitter and email her at alexandra.canalyahoofinance.com.