Netflix has close to 204 million paying customers. In fact, a lot more users watch series and films on the streaming giant because many of them share their family and friends' accounts for free. It would be easy to ban that. However, Netflix does not do this. Why?
In October 2019, Netflix is just presenting its quarterly figures when it suddenly becomes uncomfortable for many users. In the public Q&A, an analyst asked about a sensitive topic: sharing passwords and accounts. Is that on the Netflix agenda? And if so, how should the problem be solved without annoying users? When the answer from Product Manager Gregory Peters is heard, a stone should be taken from the heart of many. "We are monitoring the situation," he says. However, there are currently no plans to change anything. But why not?
Last year, Netflix broke another record. The world's largest streaming platform for films and series has broken the 200 million paying customers mark. In the last quarter alone, there were 8.5 million new subscribers. Over the whole of 2020, there were 36.5 million people, many of whom were probably looking for an alternative to closed cinemas or a distraction from the loneliness of their own four walls.
Do you pay for Netflix?
But there could be so much more. Because if you ask family and friends "Do you have Netflix?", A lot of people answer: Yes, we have. But if you then also ask whether they have their own subscription and are paying for it, the answer is often: No, we share the account – and with it the costs. Sometimes two, sometimes three, and often four. That doesn't seem to bother Netflix in the least.
Tech and stock market expert Thomas Rappold can understand that. That would just not fit in with the principles of Netflix, he says on the ntv podcast "something learned again". The streaming giant wants to give its customers freedom and flexibility. "In addition, Netflix sees itself as a passion brand," says Rappold. "Controllers like those at the tax office don't represent passion, they would damage the brand."
Understandable, Netflix does not want to write its users angry emails asking them to create their own account now, because watching for free is not appropriate. Netflix certainly doesn't want to hire a debt collection department that locates viewers in the gray area and rings their doorbell at home. But you don't need that, technically the solution is very simple – every Sky customer will know that.
"Sky lives in the past"
With the well-known pay TV broadcaster, there is no point in sharing your password with friends, each customer can register a maximum of five devices – regardless of how many people live in the household. The account is used by a family of four with four TVs, four laptops and four smartphones? Bad luck! Worse still, if you buy a new television, you have to wait a month before you can register it with Sky as a "device". The paying customers in the forum of the pay TV broadcaster are correspondingly irritated.
"Sky lives in the past," says tech expert Rappold. The company had already severely restricted access to its offerings earlier than Premiere. Back then, the hardware was the key, the famous receiver. The Wall Street observer is convinced that the pay-TV channel cut its own flesh with it. "Premiere could have occupied the market that Netflix is occupying today itself." But despite its great offer, the company never made it out of its niche. The end of the story is known: Premiere went bankrupt, was taken over by Sky and filleted.
Netflix wants to avoid this mistake at all costs, which is why the streaming giant has hardly been bothered at all by viewers who pay nothing, but at least use the platform. Because if there were similarly strict rules to those of Sky, would the "gray eyes" then take out a Netflix subscription to continue watching? Unlikely. Instead, many of them would probably think back a few years to the time without streaming services bored and wonder how people used to watch the latest series and films. The answer? With the help of illegal offers on the net.
Better gray than black
Netflix founder Reed Hastings understood how the internet works. It's open. There is nothing that does not exist – even if not always completely legal. That is why gray gazers can quickly become black gazers who, like before, watch the new Netflix hit free of charge on websites with obscure names and endings. Then prefer users who pay nothing, but at least help with marketing.
"Again something learned" is a podcast for the curious: Will Deutsche Bank get its money back from Donald Trump? Why do some commercial pilots have to pay money for their job? Why is chip maker TSMC the most important company in the world? Listen to it and get a little smarter 3 times a week.
You can find all episodes in the ntv app, Audio Now, Apple Podcasts and Spotify. For all other podcast apps, you can use the RSS feed. Copy and paste the feed url and simply add "Again Learned" to your podcast subscriptions.
At the end of November, the company proudly and loudly trumpeted on Twitter that "The Queen's Gambit" was the biggest ratings hit to date. 62 million households watched the miniseries in the first four weeks – Numbers that TV stations can only dream of. Which viewers were counted for? Of course, those who share the account of acquaintances and friends. And those who can boast of such successes are sure to make new customers curious. Until they say: So many viewers? But now I have to take a look.
Of course, Netflix loses a lot of money due to its customer friendliness. In the spring of 2019, the platform Cord Cutting – in English: cutting through cables, which in the US stands for saying goodbye to classic cable television – asked more than 1000 US citizens in a representative survey how freely they use their Netflix password. Quite generously, a good 15 percent said they share their password with others.
Netflix waives billions of euros
If you take the current 204 million paying users, that's at least 31 million people who pass the time free of charge with Netflix. If instead they all booked the cheapest German subscription for 7.99 euros a month, Netflix would earn almost three billion euros more a year. With the most expensive subscription it would even be 6.7 billion euros.
Sporty sums that the streaming giant gladly forego. Because even 24 years after it started as an online video store, the untapped market is still so large that it is better to grow than to pull every euro or dollar out of the customer's pocket.
"So far, Netflix has only taken 10 percent of the screen usage on the largest, the American market," says tech expert Rappold. "That means 90 percent of viewers still use cable TV. This is the main point of attack for Netflix and other streaming providers to make linear TV obsolete."
And open up new markets. Of the 204 million paying users, less than a third – 63 million – are currently from India, Asia or South America. Only when these regions have been developed will restrictions based on the Sky model become more likely – and best friends need their own Netflix account.
. (tagsToTranslate) Economy (t) Streaming (t) Netflix (t) TV (t) Pay TV (t) Sky (t) Disney (t) Walt Disney Company (t) Apple