The ability to share a Netflix account has been one of the company’s growth engines over the years and has helped make it the world leader in pay-TV. For some time, however, Netflix has seen an opportunity for growth in those households that don’t pay or share the cost of the subscription. The company previously announced it would launch shared subscriptions later this year in 2022, but has now set a more specific date: It will phase out home use in the first quarter of this year, as announced in its presentation of fourth-quarter results. .
“This will not be a popular move,” admitted Greg Peters in his newly vacated role as co-CEO. “There will be current subscribers who are not happy with this measure and we will see some reaction in the form of victims,” he admitted in an interview the company gave after presenting the results on its YouTube channel for investors Relations radiated.
Netflix claims that there are currently more than 100 million households sharing Netflix. “The widespread account sharing today is eroding our long-term ability to invest in and improve Netflix and grow our business,” the company says. The company ended 2022 with a record 230 million subscribers, after adding 7.7 million in the final quarter of the year.
The company notes that its terms of service already theoretically limit Netflix usage to a single household, but it turned a blind eye because it somehow benefited it. The company started preparing the ground last year. “We’ve been hard at work developing additional new features that enhance the Netflix experience, including the ability for members to review which devices are using their account and transfer a profile to a new account,” he explains.
Netflix introduced the option to transfer the profile back in October. It allows the user to copy the information accumulated in the previous account. The data that is transmitted, as reported by Netflix on a help site, is the recommendations, viewing history (including scores given to the programs by the person), titles included in “My List”, video games selected, the set configuration (language, subtitles…) and other characteristics such as the name of the profile or the chosen avatar.
“Three or Four Dollars”
The company will introduce a shared subscription model: “When we introduce paid sharing, users in many countries will also have the option to pay more if they want to share Netflix with people they don’t live with.” to start the “generalization” of the new model “later, in the first quarter”.
Netflix hasn’t revealed the details yet, although one of the questions in the interview aired on the Investor Relations channel gives at least a clue. The interviewer, a Bank of America analyst, asked what drives customers to choose to pay “three or four dollars more” to share an account or sign up themselves. Nobody corrected it. Peters just said they’re trying to “be sensitive to finding the right pricing points, whether it’s in terms of an individual account or you know, an additional member.”
Peters also put the deadlines into perspective. Although he has confirmed that the implementation of the measure will start this quarter, it will be progressive: “We will stagger it a bit as we work by groups of countries, but we will see it in the next two quarters,” he pointed out out.
The company, which also announced managerial relief this Thursday, is also sending a reassuring message by ensuring “all users can watch Netflix while they travel, like now, either on a TV or on a mobile device.” without specifying the controls used to distinguish between usage by owners who are relocating and usage by non-subscribers.
The company recognizes that the model change may, in the short term, result in a drop in consumption of its content while some users stop seeing it because they don’t become additional members or joint payment accounts. However, he hopes the effect will be temporary and lead to an increase in subscribers. “We focus on sales, that’s our most important key figure,” emphasized Spencer Neumann as a good CFO.
Plans to crack down on Netflix’s password sharing accelerated in the first half of 2002, as the company lost subscribers for the first time in its history. Accompanying the model change is a move that was launched back in November, after Netflix rolled out a new lower pricing plan with ads in November, which it sees as an opportunity to generate additional revenue over the long term and benefit from ad billing itself more affordable entry level to attract subscribers.
The company ensures that it is satisfied with the initial results of the service with advertising in terms of user experience, value to advertisers and contribution to business. “We believe the lower price drives subscriber growth. In addition, as expected, we have observed very few changes from other plans, ”the company assured this Tuesday.
Both initiatives go hand in hand, but somehow they go hand in hand: “The ad-supported plans give us the opportunity to present a lower price to the consumer,” which partially offsets the suppression of shared passwords, explained Peters.
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