By Ben Spaeth
Photo: Bloomberg – Source
The end is nye! Netflix has begun the crackdown on shared accounts. Meaning it may soon become harder to mooch off your buddy’s account. Netflix is currently beta testing a new model in Costa Rica, Chile, and Peru that requires account holders to pay $3 to share their account with users outside of their household.
This news arrives after Netflix’s subscriber growth came in lower than expected. This move acts as a new way Netflix can generate subscribers. Specifically North American subscribers. Around 90% of Netflix’s new subscribers come from outside the United States. This move, if implemented in the United States, is estimated to be able to generate another 10 to 20 million subscribers for Netflix.
Although, user frustration could lead subscribers to take their money elsewhere. It is unlikely people would cancel their Netflix account over this, but the new subscribers Netflix is seeking to generate may resent them for kicking them off their old accounts. At a time where Netflix’s competitors are becoming bigger and bigger, the last thing Netflix should do is piss off its user base. The only positive aspect of this decision is that it may prevent another Netflix price hike in the near future, but paying an extra $3 a month to share your account seems like a price hike to me.
Most streaming services have gotten around the problem of price hikes by introducing an ad tier to their subscription options. The money the service makes off ads is used to supplement offering cheaper rates. However, Netflix does not seem keen on adding ads to its service anytime soon. To give Netflix credit though, it made its name on providing users with an ad free experience. Adding an ad tier to Netflix just doesn’t seem right after all these years. A way I could see Netflix implementing this hypothetical ad tier could be in response to the outlash to come once Netflix stops account sharing within the United States. An ad tier would be an easy way to lure in the users Netflix would lose.
What scares me though is now that Netflix has decided to take action on shared accounts, other streaming services may follow suit. A large part of the development of these streaming services has been on a “monkey see, monkey do” basis. For instance after Netflix began allowing users to have their own customizable profile, other services quickly developed individual profiles and icons. I’m sure many streaming services will see the dollar signs associated with ending account sharing and copy whatever decision Netflix will eventually make.
That decision will likely be made in tandem with Netflix’s content budget. If Netflix feels like they need more money to continue to produce more content then this might be the logical next step. As Netflix continues to hike up its price, more people will either cancel their subscription or look elsewhere for content. This may be the only move Netflix has to drive up consistent revenue without increasing the overall price.
What I don’t understand about Netflix’s plan is how they expect families to share their Netflix accounts? They could in theory allow anyone streaming from the provided home address stream freely, but that may cause a whole slew of problems once one family member leaves the household for either vacation or college. If anything, banning the sharing of accounts will just cause a bunch of college kids to lose access to Netflix. The vast majority of people who share Netflix accounts are people who wouldn’t be able to afford the service otherwise. So while on paper it may seem like Netflix could generate millions of subscribers with this decision, I sincerely doubt it will have that effect. Netflix will also lose a fair amount of viewership because of this move. Meaning it’s unlikely many of Netflix’s new shows and movies will surpass their predecessors in total hours watched. While that doesn’t directly affect Netflix’s bottom line, I get the sense that Netflix likes to boast about their total hours watched.
I hope that Netflix doesn’t implement this test in the United States. Not just because I share an account and don’t want to pay $15 a month, but because once Netflix decides to ban account sharing, every other streaming service will too.