Wednesday, February 8, 2023

Netflix announces it will be phasing out shared accounts this quarter

The ability to share a Netflix account has been one of the company’s growth engines over the years and has contributed to making it the world leader in pay television. For some time, however, Netflix has seen in households that don’t pay, or that share the cost of subscriptions, an opportunity for growth. The company already announced in 2022 that it hopes to launch shared subscriptions this year, but now it has set a more precise date: It will phase out home use in the first quarter of this year, as opposed to the fourth quarter. It was announced in the presentation of Quarterly results…

“It’s not going to be a universally popular move,” acknowledged Greg Peters with his newly released co-CEO role. “There will be existing customers who are not happy with this measure and we will see a bit of backlash in the form of casualties,” he acknowledged in an interview aired after the company presented the results on its YouTube investor relations channel.

Netflix claims that there are currently over 100 million households that share Netflix. “Today’s widespread account sharing undermines our long-term ability to invest in and improve Netflix, as well as grow our business,” the company says. The company closed 2022 with a record number of 230 million customers, after adding 7.7 million in the last quarter of the year.

The company points out that its terms of use already theoretically limit Netflix use to a single household, but it’s turning a blind eye because it’s somehow benefited from it. The company had started preparing the land last year itself. “We’ve worked hard to create additional new features that enhance the Netflix experience, including the ability for members to check which devices are using their account and transfer profiles to a new account ,” they tell.

Netflix had already launched the option to transfer profiles last October. With this, the user will be able to copy the information that was stored in the previous account. The data that will be transferred, as reported by Netflix on a support website, are recommendations, viewing history (including scores given to programs by the individual), titles included in my list, selected video games, installed configurations ( language, subtitles…) and other attributes such as the name of the profile or the chosen avatar.

“three or four dollars”

The company will launch a shared subscription model: “As we roll out paid sharing, users in many countries will also have the option of paying more if they want to share Netflix with people they don’t live with.” ” The company assured that it would start “normalizing” the “new model” later, in the first quarter.

Netflix has yet to reveal the details, although a question in an interview aired on the Investor Relations Channel offers at least one clue. The interviewer, a Bank of America analyst, has asked what would motivate customers to choose between paying “three or four dollars more” for account sharing or signing up on their own. No one has fixed it. Peters has only said that they are “trying to be sensitive to finding the right price points, whether it’s in the context of an individual account or, you know, an additional member.”

Peters has also qualified the deadlines. Although he confirmed that the measure will begin to be implemented this quarter, it will be progressive: “We will stagger it a bit as we work by groups of countries, but we will see it over the next two quarters,” he added. .

The firm, which also announced executive action relief this Thursday, also sends a reassuring message by ensuring that “like now, all users will be able to watch Netflix while traveling, either on television or on a mobile device”. without giving details of the control mechanisms that will be implemented to differentiate between the access of holders who transfer and those who are not subscribers.

The company recognizes that the model change could mean a drop in consumption of its content in the short term, while some users stop watching them because they don’t become additional subscribers or shared paid accounts. However, he expects the effect to be temporary and will lead to an increase in customers. “We’re focused on revenue, which is our main metric,” as a good CFO points out, Spencer Newman.

Netflix’s plans to crack down on password sharing intensified in the first half of 2002, when the company lost subscribers for the first time in its history. The change in model is in line with a measure that had already been rolled out in November, when Netflix rolled out a new low-price plan with advertising, which it says will benefit from long-term incremental revenue and ad billing. Sees it as an opportunity. , while a more affordable entry-level to attract customers.

The company ensures that it is satisfied with the service’s first results in user experience, value for advertisers and contribution to business. “We believe that low pricing is driving the subscriber growth. Also, as we expected, we have seen very few changes from other plans,” the company assured this Tuesday.

The two go hand in hand with the first, but somehow they go hand in hand: “advertising-supported plans give us the opportunity to present the consumer with a lower price”, which partially compensates for the suppression of shared passwords, Peters explained.

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