Netflix This week he shocked the world by saying he plans to finally deal with the rampant practice of password-sharing.
More than 100 million households use a common password, Netflix said on Tuesdayincluding 30 million in the United States and Canada.
But the company does not simply plan to freeze those joint accounts. Instead, the company will likely prefer additional fees for accounts used by multiple people outside the home.
Netflix’s plan to capture that lost revenue will start sending an alert to account holders whose passwords are used by other families.
The company already Testing of this function has begun in Peru, Costa Rica and Chile. For accounts that share a password between titles, Netflix charges an additional fee to add “sub-accounts” for up to two people outside the home. The price varies by country: around $2.13 per month in Peru, $2.99 in Costa Rica, and $2.92 in Chile, based on current exchange rates.
The company also allows people who use a shared password to transfer their personal profile information to a new account or sub-account, allowing them to keep their viewing history and recommendations.
“If you have a sister, for example, who lives in a different city, and you want to share Netflix with her, that’s great,” Greg Peters, chief operating officer, said during a company earnings conference call. “We are not trying to close this exchange, but we will ask you to pay a little bit more to be able to share with it and get the benefit and value of the service, but we also get the revenue associated with this offer.”
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Netflix hasn’t said how much revenue it expects to generate by rolling out its worldwide sharing strategy, though Peters said he thinks it will take about a year to put its secondary account rates into use globally.
Survey conducted by research organization Time2Play It has been suggested that about 80% of Americans Those who use someone else’s password won’t get their new account if they can’t share the password. Did not investigate how many existing users would be willing to pay more to share with others.
Peters also suggested that the company may continue to adjust pricing or revise its testing strategy.
“It will take some time to figure that out and strike the right balance,” he said. “So just to outline your expectations, I think we’ll spend a year or so iterating and then implementing all of that until we can launch this solution globally, including in markets like the US.”
Unprecedented Netflix plan. No major broadcaster has ever cracked down on password sharing before. Other streaming service owners, such as DisneyAnd Discover Warner Bros.NBCUniversal Comcast s Paramount GlobalDon’t make your own plans until after reviewing the Netflix password sharing fixes.
No doubt some account holders will be surprised to hear from Netflix that their passwords are being shared. It’s also unclear how long Netflix will allow viewers on a subscribed account to maintain access if the primary account holder decides not to pay the additional fee.
In addition, Netflix will have to be careful when selecting password-sharing programs to avoid misclassifying people as abusive, such as family members who live away from home temporarily.
The unwillingness to take action against this group of users will likely save millions of people from Netflix’s crackdown, at least initially.
“They will start with serial abusers,” said Rich Greenfield, media analyst at LightShed Partners. “If you have 15 people using your account, that’s pretty easy.”
It is also unlikely that the company will want its employees to be involved in disputes over what is classified as a main account and what is classified as a sub account. Questioning these tariffs may be inappropriate for employees and customers alike, who have so far viewed Netflix as a file The best brand in its class.
“Netflix knows who you are,” Greenfield said, whether or not you use your own custom profile.
Five years ago, Netflix encouraged password sharing. The company’s philosophy at the time was that they simply wanted more views for their content, which in turn would create quite a buzz and lead to actual subscriptions. This strategy appears to be paying off. Netflix subscriptions have grown every quarter for over 10 years, Until the last trimester of pregnancy.
In 2017, the Netflix account tweeted, “Love shares a password.”
Now, the company would like to stop doing that.
Disclosure: Comcast’s NBCUniversal is the parent company of CNBC.
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