Your mom in Quebec, your childhood friend in Rimouski, and your neighbor “borrowing” your Netflix account to watch TV? Someone will soon have to pay for your generosity. This was announced by the streaming service, which wants to regulate the sharing of passwords within a year to curb its loss of subscribers.
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Netflix estimates that of its 220 million subscribers worldwide, 100 million share their accounts with either family or friends. We’re not talking about people living under the same roof, each with their own profile, but about people from different households who would normally have to pay for their own TV account.
A viable stock for Netflix so far
The statistics surprise. While it only takes one illegal download of a TV series from the internet to get an email from HBO’s lawyers, Netflix has been letting the situation get out of hand for years instead.
For the American company, sharing was previously considered a blessing in disguise: the TV equivalent of a free sample at Costco. Granted, Netflix lost potential revenue this way, but many of these shared accounts were intended for users who otherwise likely wouldn’t have tried the service.
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The need for growth is a game changer
As long as Netflix was growing at breakneck speed, the game was worth the effort. However, the situation changed when the company’s latest financial results were announced in April: for the first time since the launch of the online service, the number of subscribers fell.
It’s not really his fault. Inflation, the war in Ukraine and above all the increasingly fierce competition in this industry, especially since Disney+, are to blame for this decline. The news was nonetheless greeted with a brick and a beacon by financial markets, to the point that Netflix’s share price fell 35% in one fell swoop. Dealing with shared passwords is an easy and quick way to get new paying subscribers and get back to growth.
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An official release is expected
Contrary to what has been circulating so far, the complete end of account sharing is not to be expected, but its formalization.
It’s still unclear how Netflix will go about doing this, as the company plans to try different solutions over the next year to best monetize these shared accounts. The work has already started. For example, subscribers in Chile, Peru, and Costa Rica can export profiles and pay extra (around $3-4) to add a user to a folder.
The challenge now is to find the best recipe for charging subscribers who share their account in a way that encourages those who have never paid to do so, without making the offer as attractive as that those who pay the maximum amount will be persuaded to join forces to share their account in turn.