Netflix Continues Crusade Against Password Sharing, Announces New Test Feature In 5 Latin American Countries

Netflix, Inc. NFLX announced Monday it plans to add a new feature in five Latin American countries that would require households to pay an additional fee for using an account in an additional home.

What Happened: The new feature will be introduced in Argentina, the Dominic Republic, El Salvador, Guatemala and Honduras in August, the company said in a release. This is an improvement from the "one extra member" feature Netflix announced in Chile, Costa Rica and Peru in March.

Under the new plan, if a user accesses the account somewhere other than their paying households for more than two weeks, they will receive an in-app notification for either adding a household or changing the primary household to the new location.

To use a household's account in additional homes, an extra 219 Pesos ($1.70) per month per home will be charged in Argentina, $2.99 per month per home in the other countries, the company said. The Basic plan membership allows adding one extra home, and the Standard and Premium plans allow for the addition of two extra and three extra homes, respectively.

The company also said users can watch while outside their homes on their laptops, tablets, or mobiles. Users can also control where their accounts are used and remove any homes at any time from their account settings page.

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Why It's Important: After reporting a massive loss of net subscriber additions in the first quarter, Netflix said it is taking some measures to stem the rot. This included a crack down on password sharing.

The company estimates that over 100 million households use accounts paid for by other people. Password sharing is rampant in Latin America, which explains why the company has begun testing new features in the region.

"We value our members, and recognize that they have many entertainment choices. So we're working hard to make great TV shows and films, and to be as thoughtful as possible about how we charge for use across multiple homes," said Chengyi Long, Director of Product Innovation at Netflix.

The company is due to release its June quarter earnings release Tuesday after the market closes.

In premarket trading Tuesday, Netflix shares added 5.67% to $201.75 on Tuesday afternoon, according to Benzinga Pro data.