The era of being able to share a Netflix account with multiple people, whether family members or former partners, will soon be coming to an end.
The streaming giant has signaled that from early 2023 it will launch a crackdown on those who share their account with multiple people and implement fees for additional users outside of the primary account holder.
In its October 18 shareholder update, Netflix said it would continue with plans to “monetize account sharing” and that primary account holders can create sub-accounts for “additional members” if they “want to pay for their family and friends”. ”
The move follows a pilot of such fees in Peru, Chile and Costa Rica earlier this year, in which Netflix subscribers were charged 2,380 Chilean pesos ($3.36 CAD), 7.9 Peruvian soles (CAD $2.72) and about 1,816 in Costa Rican colonies (about $4). CAD) for each additional member, with a maximum of two additional members per account.
Netflix is also introducing an account transfer service, where those who had a profile on someone else’s account can move their profile and keep all of their viewer data, but must sign up for their own subscription.
In April 2022, Netflix reported to shareholders that it was losing subscribers for the first time in 10 years and pointed out that account password sharing was part of the problem.
In its latest third-quarter earnings report, Netflix said it reversed that trend and gained an additional 2.4 million net subscribers between July and September this year.
The platform will also launch a cheaper “ad-supported” subscription plan on November 1 in Canada, as well as Mexico, then launch it more widely throughout the month. These plans will be 20-40% cheaper than current subscription prices, according to the Q3 report. In Canada, the new ad-supported tier will cost $5.99 per month.
Louis-Etienne Dubois, professor of creative industries management at Metropolitan University of Toronto, told CTVNews.ca that Netflix plans to introduce fees for shared accounts comes as no surprise.
“They hinted at this idea of cracking down on shared accounts or illegal users,” he said. “The feasibility of the crackdown is much more complex to realize, which is probably why it’s taken so long from when they started teasing this announcement to when they’re going to enforce it.”
He said it’s also not clear how much Netflix will charge for shared accounts, and it wouldn’t be surprising if this change were delayed until 2023.
Markets have looked to Netflix to make these changes to generate additional revenue, Dubois said.
As for public reaction when fees are introduced, Netflix has been testing options in secondary markets in South America, he said. Just because it worked there doesn’t necessarily mean it will work globally, he explained.
Whether those using shared accounts will actually follow Netflix rules and pay for separate accounts remains to be seen, he said.
“So it will be interesting to see how many of those profiles or users aren’t paying for content right now, and how many of them will actually result in paid subscriptions,” he said.
But putting in place additional fees isn’t a long-term sustainable growth strategy if Netflix is to compete with other streaming services, Dubois said.
“Suppressing users is not a growth strategy…it’s definitely not how Netflix is going to continue to grow and continue to compete with other platforms,” he said.
To do this, the platform will have to continue to develop quality content, as other streaming services such as Disney+ have other sources of income than streaming, he said. Netflix, on the other hand, is a bit of a “one-trick pony,” Dubois said.
And its surge in subscribers this quarter isn’t too exciting, he added.
“I wouldn’t celebrate right away. We have to see if it is something that is sustainable,” he said.
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