Netflix has long since known that peope in many countries share their accounts(login details) with people in other households. In many communities it is common for a group of friends or family members to share one account.
The company does have a limit on the number of people who can stream videos simultaneously. But for most, this was never a problem. It was highly unlikely that all the sharers would want to watch movies exactly at the same time. And so the convenience resulted in account sharing becoming a strategy to save money.
Things were looking great for everyone. Netflix was posting great quarterly numbers and didn’t need to bother about the revenue lost due to account sharing. If more people were sharing accounts, it only meant their service was good and the company took that as a positive. Until things started to change…
Inflation
People associate inflation with the cost of products and services increasing. As these costs increase, they have to reduce spending elsewhere to afford the higher priced goods.
More often than not, it is entertainment that gets the axe and people start spending more responsibly. Netflix has been a victim of exactly this phenomenon post covid.
During the first six months of 2022, Netflix has lost nearly 3 million subscribers. While this isn’t as bad as originally feared, it is still a number the company executives, as well as its shareholders, don’t like.
Account sharing
As already pointed out in the introduction, Netflix has continuously been taking a hit on its revenues because of account sharing.
Netlix’s terms and conditions do not allow sharing of an account beyond one household and password sharing is frowned upon. Yet the company never actively enforced this. Now, they finally want to do something about it.
Right now, the company offers the following payment plans:
In order to tap into the missed revenue from account sharing, the company has two options:
- enforce action against password sharing and make sure people spend at least $9.99 to get their own account
- charge a fee for password sharing
Taking the first route might be unpopular and many people who were using the netflix accounts for free might not even be interested in a paid subscription anyways.
The second route, however, is one that might be better received by the public and isn’t as heavy on the pockets of the subscribers.
Netflix, perhaps as a test, is introducing a fee for account sharing in the South American market. They intend to charge an extra $2.99 for every new home that the account will be used in. Once this is implemented, it will be worth keeping an eye on how effective this is.
One drawback is that if you are travelling and want to stream movies at your hotel, you’ll have to add it as an extra home. What other drawbacks such a policy entails remains to be seen…
