Netflix is a streaming platform, where after purchasing a subscription plan one can access a very wide range of films or series. For some time it has been exceptionally popular and now an average person is known to have a Netflix account. However, people have found way not to pay the full amount of money for the service. Because of that, the company generates lower profit, thus looking for a way to overcome this problem.
Sharing passwords is common across Netflix subscribers. Although this feature is intended for enabling access to the service by members of a household e.g. a family, people share account among their friends. This way, a group of 5 people can get an account for a fifth of the original price and use the service independently.
In this situation, the company must solve the problem of people who take advantage of the system, without creating inconvenience for legitimate users. The recent idea which is now being tested in selected countries is a step in a good way for Netflix. When the system notices activity among multiple devices in different locations, a message is displayed for a user. It encourages to raise subscription fee in case of using the password sharing method. The fee is optional, yet its purpose is to remind that the account is being used incorrectly. Matt Novak, author of the article about the case is calling it the “guilt fee”.
Sometimes, even if people were ready to pay for the service full price, they would have to make a new account and lose all saved film history and preferences. This is why now Netflix also enables to separate accounts and subscription plan into two for a fee.
As good as the solution may sounds, it is only a temporary one and raises the company’s profit moderately. With password sharing trick income is reduced significantly and fewer Netflix productions are released making the service less appealing for all users. Unless the service is going to remodel its subscription plan, it will not hold top streaming service position.
Sources:
https://gizmodo.com/netflix-testing-new-guilt-tax-for-password-sharers-1848665352
I personally cannot understand why 5 friends sharing password is seen as something bad if 5 family members sharing password is okay. For example, I currently live in Poland, my sister was in Canada, and my parents are living in Korea, but we share one account because we are family. Also, what would they say to an unmarried couple who live separately but think they are family? I think Netflix rather renew their subscription plans based on the number of people sharing an account rather than put guilt on the customer.
Netflix reported a net loss of subscribers in the first quarter for the first time in 10 years. Only 200,000, but that was enough to get the streaming platform slaughtered on the stock market. It’s the end of an era of undivided growth for the company, which will have to review its fundamentals. Among other measures, it is putting an end to informal account sharing and is seriously considering introducing an offer including advertising. But we can ask ourselves whether these measures are really sustainable for the company. They may also have the opposite effect and drive users away.