Tuesday, March 26

Netflix will end account sharing globally: everything we know about how this control will work


Troubled Hours on Netflix. the streaming platform has lost subscribers for the first time in a decade —no less than 200,000 in a single quarter— and the effect of that announcement has been a collapse of about 25% of the value of its shares on the stock market.

This has caused two approaches to be put in place to tackle the problem. The first is to launch cheaper streaming plans with advertising. The second is something that has been stalking us for a long time: they will charge more to those users who want to share accounts.

The bargain of sharing accounts is over

During years Netflix has turned a blind eye with account sharing: “family” subscriptions that allowed four simultaneous connections to the service gave a lot of wiggle room for password sharing.

Thus, all this time one could share an account even with family or friends not residing in the family home of the main subscriber, and most importantly: they could do it without extra charges. On Netflix they made it clear why they had not moved until now:

Sharing has likely helped fuel our growth by getting more people to use and enjoy Netflix. And we’ve always tried to make it easy to share within a member’s home, with features like profiles and multicasting. Although [estas opciones para compartir] have been very popular, they have created confusion about when and how Netflix can be shared with other households.

That is going to end. The company revealed in its disappointing quarterly results that one of the reasons for its slow growth in 2022 is that account sharing.

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Netflix is ​​now the weak link in streaming.  The future solution will surely go through the announcements

The company estimates that legitimate Netflix passwords are being shared illegitimately: more than 100 million households around the world are not paying (what they should) to watch Netflix, and that number includes 30 million households in the US and Canada, as indicated in Variety. Those responsible for Netflix explained the problem:

“Account sharing relative to the percentage of our paying subscribers hasn’t changed much over the years, but along with [la ralentización del ritmo de adopción de la banda ancha y la televisión conectada]means it’s harder to grow subscribers in many markets, an issue that was masked by our growth during the COVID-19 pandemic.”

The “sub-accounts” arrive

That has made Netflix decide to focus on “how to better monetize account sharing“, something that those responsible for the company see” as a great opportunity since these homes are already watching Netflix and enjoying our service.

Prices

We already know what Netflix’s plan is, because they have actually already launched it in a preliminary way. In Chile, Costa Rica and Peru, an option to create “sub-accounts” was activated that allows adding two extra members to the subscription that can be people who do not live at the same address. In these sub-accounts the cost of the service is between 2 and 3 dollars per month for each extra userand that cost is added to the normal service.

Implementing that feature will cause no real account sharing to actually occur. In fact, these subaccounts are more like associated accounts. Some of course will have their own profile and recommendations, but above all they will have their own Netflix username and password: This data will not be the same as the “primary owner” of that account.

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This way of approaching the sharing of accounts allows, according to Netflix, that later those extra users can be easily converted into normal users from Netflix if they ever decide to pay for the full service. Your viewing history, content list and recommendations will be transferred to that own account with that own billing.

How does Netflix detect illegitimately shared accounts?

As explained on TechCrunch, the new Netflix system does not base its detection on shared accounts on illegitimate in location data (such as GPS)instead, it leverages the same information that it already leveraged to provide the service to end users.

Netflix is ​​starting to charge for account sharing.  It makes sense to think that it is only the beginning of something else.

So the detection is based on IP addresses, device identifiers and other data about the devices that use the Netflix account at home. Thanks to this method, Netflix can identify if there is a persistent use of shared accounts in different addresses.

According to consulting firm Cowen & Co., if Netflix deploys this system globally, could increase its annual revenue by $1.6 billion, something that would undoubtedly contribute significantly to improving its financial results. At Neflix they seem determined to gradually apply that system globally:

“There’s a wide range of commitments when it comes to home sharing, from heavy watchers to casual users. So while we can’t monetize everything right now, we think it’s a great opportunity in the short to medium term. As that we work to monetize the shared use, the growth of the ARM [ingreso medio por afiliación]revenue and views will become more important indicators of our success than membership growth.”

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