They know who all the password sharers are. They've spent months, or even years running models to predict the fallout if they cut off password sharing. None of the actual results are going to be in any way surprising to them.
So while people here think they're doing this to their own detriment, their legion of scientists have already told them the end result which is obviously not detrimental or they wouldn't be doing it now.
As a "scientist" mentioned in your comment (they call us Research Engineers), I have to tell you that this is a business decision. One or more than one suit in the C-level made this decision.
And, as a scientist, you cannot build a model with a never-happened-before phenomena. Only "risk specialists", "risk engineers", etc. which are different names for BSers will even try to "predict" this.
How can one build a "model" with no x (password policing enforcement) and only y (stay or drop) is beyond me. If anyone does, I will show you an idiot/BSer.
I am sure this is a business decision. Or MLEs/Deep Learning Engineers are going beyond the capabilities of their fields.
Sure, you can predict if a user is going to drop if a show he was binging is going away or his watching pattern, time spent watching, etc. But to build models with password policing enforcement? Hah!
Trying to predict whether this decision is harmful in the long run is not in the realm of science, but of art, business, or bullshitting.
I don't know if NFLX did a smaller scale pilot study and tried to build a model, but that would be inadequate.
By this logic big tech companies could never make mistakes since they all have legions of data and analysts, which is just objectively not true. Collecting the right data, analyzing it well, and using that to make the right product and business decisions is non-trivial work. Some folks think that you can blindly throw big data at a problem to solve it, but that is usually not the case.
They can run all the models in the world but it only takes one misunderstood factor to underestimate the fallout. I think they want the other streaming services to follow suit (like Apple with the AUX) but if the others dont bite, Netflix screwed themselves. Most of their users feel betrayed at a time where competition is more than ever. You dont have to be smart to understand its not a good move.
So while people here think they're doing this to their own detriment, their legion of scientists have already told them the end result which is obviously not detrimental or they wouldn't be doing it now.