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Following its rough first-quarter earnings report earlier this year, Netflix (NFLX 3.44%) announced a handful of strategies to tackle its declining subscriber numbers. Among those plans was a move to crack down on account sharing, something that has long been against Netflix’s terms of service but rarely enforced.

The company said it would begin testing ways to dissuade users from giving out their login information to family and friends, or at least encourage such users to pay for the privilege.

Testing, testing, testing

Netflix rolled out a plan earlier this year that charges users a little extra if the company believes accounts are being shared with others. On the same subject : Farhoud Meybodi Launches New Production Company Ritual Art (EXCLUSIVE). The pilot program was implemented in Peru, Chile and Costa Rica, and offending subscribers received notices of adjusted rates because other households used their login.

Many such customers have expressed confusion, saying they thought a “household” included all user profiles linked to a single account, even if those people didn’t live under the same roof.

Netflix has since watched a new test go live on August 23rd. It defines “households” as all viewers based on a single address. The pilot will be implemented in Guatemala, El Salvador, Honduras, Argentina and the Dominican Republic, and as before, additional fees will be charged if the company determines that account login information is being shared with users in a secondary location. However, there are some notable holes in the plan, meaning it’s possible this strategy could unravel quickly.

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Netflix wants to watch your TV

Netflix says it will monitor the use of smart TVs and mark additional TVs that are not in the primary residence. The company notes that viewers will have a two-week standstill period when it identifies a secondary location, after which it will charge customers extra if they wish to remain logged in to the additional device. At first blush, it sounds like a logical plan, but the devil is in the details.

Netflix has released a support page describing how it will monitor usage to identify smart TVs in other households. The streamer states that it will collect “information such as IP addresses, device IDs and account activity” to help it determine when subscribers are in violation of the rules. See the article : Netflix added 43 new movies and shows this week. Unfortunately, none of these data collection methods are completely reliable indicators, and at least two aspects can be overcome relatively easily.

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An IP address is not equal to a home address

The first problem with Netflix’s plan is its reliance on IP addresses. Internet Service Providers (ISPs) typically assign an IP address to a customer’s broadband connection. On the same subject : Country Queen: The first Netflix series produced in Kenya will hit the screen. This series of numbers and periods is dynamic, meaning it can (and does) change frequently, making it effectively useless to link activity to a single property over an extended period of time.

It is important to note that IP addresses and related web activity can be linked to a physical location, but because ISPs control this information, it usually involves an order or other court order. Netflix will almost certainly never search for something as drastic as that, so it probably expects limited insight from IP addresses. But what about device IDs?

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Smart-TV device IDs can be spoofed

Netflix’s decision to track IDs for smart TVs makes a lot of sense because such identifiers are linked to a physical device. And of course, unlike a smartphone or laptop, smart TVs are inherently usually mounted in one place – this alone makes them a better proxy for location than broadband IP addresses. Yet enterprising customers will always find a way.

Device spoofing is a technique that has long existed in the PC world. For the uninitiated, it is a technical process of changing a machine’s factory-assigned MAC address, a code that networks use to identify individual machines. And because smart TVs are really just computers with nice screens in front, they can be manipulated in many of the same ways as a laptop or desktop PC.

Admittedly, it may sound excessive to replace a smart TV’s MAC address to save a few bucks on a Netflix subscription, but there’s a precedent. Many who participated in the 1990s will remember the underground trade in so-called “black boxes”, illegal TV boxes that give viewers free access to entire cable packages. In short, if Netflix relies on device IDs to bill customers more, expect plenty of online forums to offer solutions.

Perfect is the enemy of good

The fact that Netflix is ​​rolling out this strategy – with such inherent flaws – suggests that the company knows that there is no perfect method to stop all password sharing on its platform. But maybe the streamer is fine with that. After all, the goal may not be to find the structure that really works, but to land on a method that is good enough.

Since the early days of the streaming industry, shared log-ins have almost been treated as a promotional activity by Netflix and its like based on the following idea: Yes, many people do not pay, but one day they will.

But with the company’s future still uncertain, Netflix knows the time has come to encourage more of its viewers to pay. These pilot strategies will hopefully provide insight into whether the company has found a “good enough” solution, or whether it will lead for some time yet.

Tom Wilton has a business relationship with Netflix, but has no financial position in any of the aforementioned shares. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.

Tom Wilton has a business relationship with Netflix, but has no financial position in any of the aforementioned shares. The Motley Fool has positions in and recommends Netflix. The Motley Fool has a disclosure policy.

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