In the age of streaming, sharing your Netflix password brings people closer. But it’s not going to be that easy anymore.
Netflix wants to get rid of freeloaders and has a plan in place for it. Here’s what we know about what’s coming.
Account sharing comes at a price.
The streaming giant has said it will start charging customers for sharing passwords by early next year. It is an attempt to make rogue users pay for the service.
Confirming its decision in a letter to investors, Netflix said that it was moving forward with its plan to “monetize account sharing.” Subscribers will now have to pay an additional fee for sharing account details with users outside their households. As mentioned earlier, you can no longer share the password with friends and co-workers.
Subscribers who want to continue sharing with those outside the household will have to pay for the “sub-accounts” of extra members. According to a report in TIME, those using a borrowed account can transfer their existing profile information – their viewing history and personalized recommendations – to their subscription.
“We’ve landed on a thoughtful approach to monetizing account sharing, and we’ll begin rolling this out more broadly starting in early 2023. After listening to consumer feedback, we are going to offer the ability for borrowers to transfer their Netflix profile into their account, and for sharers to manage their devices more easily and to create sub-accounts (“extra members”) if they want to pay for family or friends,” the company announced in the letter.
So far, Netflix has not revealed how much it will charge for the “extra members.”
The experiment in 3 countries
For years, Netflix was liberal when it came to accounting sharing. But earlier this year, it started testing how to get shared accounts to pay for the subscription after recording its most significant loss in subscribers.
The experiment started in Costa Rica, Chile, and Peru. With an additional fee, two more two extra members could avail of the subscription. It cost $2.99 (Rs 247), 2,380 Chilean pesos (Rs 200), and 7.9 Peruvian sol (Rs 163) in the three nations, respectively.
So if Netflix introduces a similar fee in India, it will likely cost anywhere between Rs 150 and Rs 250.
In July, Netflix tested a different method in Argentina, the Dominican Republic, El Salvador, Guatemala, and Honduras. It established the account’s primary residence as the “home” for the membership and streaming, and additional homes would be allowed for two weeks. Once this time is over, the account would be prompted to set up and pay for other “homes,” reports CNET.
This is not Netflix’s first attempt at clamping down on password sharing. Last year, it experimented with an account verification tool to keep unauthorized users from mooching off others’ accounts, reports The Verge.
But why the change?
According to a report by Livemint, Netflix believes that sharing passwords is one of the reasons for its slow growth. It lost 12 lakh customers during the first half of 2022. The OTT platform has also been reporting a loss in revenue.
In its April shareholder letter, the company said it was losing subscribers for the first time in over a decade. It noted that a check on password sharing would be a “big opportunity” for revenue growth. The revenue lost due to account sharing affected its ability to “invest in great new TV and films.”
While things have improved in the third quarter for Netflix, it is still far from its past performance. Chief Financial Officer Spencer Neumann said the company is still not growing as fast as it liked. It added 2.4 million subscribers, higher than the one million it had projected the previous quarter.
There will be ads
More changes are in store for Netflix. Last week, it announced that some countries would introduce a subsidized subscription option with ads in November.
According to Netflix’s Chief Operating Officer Greg Peters, basic with ads subscriptions will cost $6.99 in the United States, three dollars less than the primary option without ads. “The timing is great because we are at this pivotal moment in the entertainment industry and the evolution of that industry,” Peters said. “Now streaming has surpassed broadcast and cable for total TV time in the United States.”
The discounted version will be available in Australia, Brazil, Britain, Canada, France, Germany, Italy, Japan, South Korea, Mexico, Spain, and the United States.
With all the in-store changes, Netflix has forecast a gain of 4.5 million subscribers for the fourth quarter.