Netflix announced on Tuesday that users in the United States, France and around 100 other countries around the world will now have to pay extra to share their access codes to the service with people outside their household, as part of its strategy to diversify income. The streaming veteran has been testing this new formula for a year, and has already implemented it in Canada in particular, after a difficult year 2022, marked by subscriber losses in the first half, before bouncing back in the second.
“More than 100 million households share their account, which affects our ability to invest in great movies and TV series,” Netflix said in a statement in February. Prices vary by country: US households will now have to pay nearly $8 more per month to authorize a guest to use their account. “Your Netflix account is for you and for the people who live with you, that is to say your household”, explains the platform in an email which must be sent Tuesday to all subscribers concerned.
The message indicates the two possible solutions for those who already share their identifiers: they can add an additional subscriber by paying the supplement, or transfer the profile of a person outside the household. This one will have to subscribe to its own subscription but will thus preserve its preferences.
Fight against “profiteers”
Netflix, which has more than 232 million subscribers, also added a cheaper subscription with advertising at the end of 2022, after years of reluctance. It now has nearly 5 million monthly active users, according to the company. “It’s no coincidence that Netflix leads both approaches together,” commented Insider Intelligence’s Ross Benes. “People who use other people’s accounts, like those who choose the formula with advertising, are looking to save money. For profiteers who will lose their access, the new subscription will therefore be an attractive option”, detailed the analyst
“And it’s a win-win for the company struggling to grow viewership as quickly as advertisers would like.” The strategy to restrict password sharing had been delayed, but testing and deployment in Latin America and more recently in Canada have been successful, according to Greg Peters, the company’s co-chief executive. “At first, there are cancellations. And then people who were using borrowed identifiers create their own accounts and add profiles, and we regain ground in terms of subscriptions and income,” he said during an analyst conference in April.
The bet carries risks, “if profiteers realize they can live without Netflix and cling to the Prime Video (Amazon), Disney+ or Max (HBO) accounts of their friends and families instead of subscribing to their own subscription”, underlined Ross Benes.
“Confusion”
In addition to these streaming services, the pioneer of the sector faces competition from platforms and social networks. In March, Insider Intelligence predicted that by 2024 adult American TikTok users will spend more than 58 minutes a day on average on the app, just behind Netflix (62 minutes), and far ahead of YouTube (48.7 minutes). To maintain its prominent place on screens, Netflix relies on its successful series, especially those that have become cultural phenomena.
“Our job is to always have more titles that people absolutely want to see,” Greg Peters summed up in January. The series “The Crown”, on Queen Elizabeth II, “Emily in Paris”, “Stranger Things” or even “Wednesday” thus contribute greatly to the popularity of the platform. In February, Netflix justified the end of unlimited password sharing in these terms: “We have always made it easier for people living together to share a Netflix account, with different profiles and the possibility of each watching their own program. ” on different screens, simultaneously.
“These tools have been immensely popular, but they’ve created confusion about when and how you can share Netflix,” the company said in a statement. Tuesday’s email also reminds subscribers that they continue to be able to watch their programs when they’re on the go.