Netflix itself doesn’t know how to distinguish shared accounts, the plan to collect extra fees is even more difficult
Netflix had a bad quarter earlier this year when new users fell for the first time in 10 years. Instead of improving the product to remedy the situation, Netflix is aiming for a more extreme solution: to stop the rampant account sharing of users today.
According to Netflix estimates, there are currently about 100 million households using shared passwords, including about 30 million households in the US and Canada. But instead of freezing these shared accounts, Netflix wants to charge more for accounts being used by people outside the family.
The feature has already begun to be tested by the company in markets such as Peru, Costa Rica, and Chile. For accounts shared between multiple addresses, Netflix will charge an additional fee to add “sub-accounts” for up to two people outside of the family. Prices in each of these countries also vary – about $2.12 per month in Peru, $2.99 in Costa Rica and $2.92 in Chile.
Netflix did not say how much revenue it expects from this operation, but chief operating officer Greg Peters said it will take about a year for the surcharge to be rolled out globally.
A survey from research organization Time2Play found that about 80% of US users, who are using someone else’s password, would not create a separate account if they could not share the password. However, the survey also did not show how many current users are willing to pay more to share with others.
Netflix’s plan is unprecedented. No major streaming service has ever prevented password or account sharing before. Other streaming services, like Disney, Warner Bros., Discovery, Comcast’s NBC Universal or Paramount Global, likely don’t have plans to restrict users from sharing passwords.
Netflix itself doesn’t know which accounts to charge
Surely some account holders will be surprised when they receive a notification from Netflix that their password is being shared. However, it is not clear how long those shared accounts will be accessible if the account holder does not pay the additional fee.
In addition, Netflix will have to find a way to determine who is intentionally sharing the account without confusing it with family members temporarily living away from home.
“They will start with those who abuse excessively,” said LightShed Partners analyst Rich Greenfield.If you have 15 people using the account with you, it will be very easy.”
Moreover, the company also does not want its employees to get into unnecessary arguments with customers to classify what is a family account and which is a shared sub-account. Setting those definitions will make both employees and customers feel bad, as well as negatively impact Netflix’s brand image in the eyes of people.
The irony is that 5 years ago, it was Netflix that encouraged its users to share passwords. At that time, the company just wanted more people to pay attention to its content, which in turn would create buzz and bring in new users. That strategy has been successful over the years. But now that things are starting to get tough, Netflix has changed.
Maybe Netflix’s real problem is not with too many people sharing, but in the content in its service – original movies produced and distributed by Netflix itself – this is what attracted users to this streaming service from the beginning. Now, while hit series are still around, an overabundance of other boring content is leading to the decline of the service as a whole.
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