The End of Free-Loading: How Tech is Shifting Consumer Expectations

The days of enjoying services and products without paying are fading fast, thanks to advances in technology. Previously, people could leverage loopholes to access various benefits for free—like using an expired student ID for museum entry, borrowing a Netflix password from a friend, or benefiting from a relative’s Costco membership. This practice, often seen as exploiting system gaps rather than outright theft, is becoming increasingly difficult due to new technological measures.

Recent moves by companies like Costco and Disney are echoing Netflix’s approach to handling subscription sharing. Both companies have announced stricter controls to prevent unauthorized use of their services. Costco is now enforcing individual memberships for store access, while Disney+ requires logins to be tied to specific households for streaming.

The technology behind these measures is becoming more sophisticated. Retailers and streaming services are implementing systems that track IP addresses and even facial recognition to prevent misuse of discounts and shared accounts. For instance, Amazon Prime and Spotify are tightening restrictions on student discounts, ensuring they are used only while the student is actively enrolled.

Netflix’s experience has set a precedent in this regard. The streaming giant initially ignored password sharing, which helped expand its user base and build brand loyalty. However, Netflix faced a significant challenge in 2022 when it lost subscribers for the first time, partly due to increased competition from other streaming platforms like Disney, Apple, and HBO, as well as the resurgence of in-person social activities.

In response, Netflix decided to enforce stricter rules on password sharing, betting that its strong brand loyalty would convince users to pay for their own subscriptions. This gamble paid off, as Netflix saw a notable increase in subscribers, adding 30 million in the past year and more than 9 million in the first quarter of this year.

While Netflix’s approach has worked for it, success is not guaranteed for others. Disney’s streaming services—Disney+, Hulu, and ESPN+—only became profitable recently. Despite Disney’s beloved brand, it’s still working to achieve the same level of essentiality that Netflix has cultivated. However, upcoming content, like the second season of “Andor,” might help bolster its appeal.

Costco, on the other hand, relies heavily on membership fees, which are crucial for its business model. Last year, membership fees accounted for $4.6 billion in revenue, significantly contributing to its profitability. Costco’s recent decision to increase membership fees reflects its strategy to sustain low prices and support staff wages. Despite the fee increase, Costco remains a popular choice due to its appealing offers, like its $1.50 hot dogs and soda, which provide a sense of value.

In summary, the trend towards stricter enforcement of account and membership usage is reshaping how consumers access goods and services. As companies tighten controls and technology advances, the days of exploiting free access are becoming a thing of the past.