Netflix will roll out a password-sharing system for accounts in the coming months, which will require additional fees to use.
“Our terms limit Netflix use to one household, but the new rules will allow you to use your account more broadly. Paid sharing will allow users in many countries to pay extra if they want to share Netflix with people they don’t live with,” Netflix writes.
After the launch of paid password exchange, Netflix expects some “cancellation reaction” in the markets, but is confident that the “long-term benefits” will lead to an increase in overall revenue. No information about prices, as well as a specific date for the launch of the new rules, is not mentioned, limiting itself to the phrase that they will be widely implemented “later in the first quarter of 2023”, that is, sometime before April.
In October, the streaming giant added the Profile Transfer account migration tool – it will allow participants with existing accounts to switch to using a new account, while keeping the data of the current profile. Netflix has also made it possible to log out of accounts remotely on select devices.
A pilot program is already running in Latin America that charges customers an additional fee (one quarter of the base rate) if other accounts use their login credentials. In May, a report by Rest of World revealed that testing had not gone well, with subscribers in Peru saying they had not been formally notified of the policy, and levels of adoption varied between users.
“Our job is to push users a little bit and create features that make the transition to their own accounts easy and simple,” Peters said during the earnings call when asked about password sharing.
Separately, the service also allowed users in Argentina, El Salvador, Guatemala, Honduras, and the Dominican Republic to purchase additional “households.”
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The introduction of pay-as-you-go is one method Netflix is using to appeal to investors as subscriber growth continues to slow. After its first loss of users in nearly 10 years in the fourth quarter of 2022, Netflix gained about 7.6 million new subscribers worldwide. The figure, while beating analysts’ expectations, is still lower than the 8.2 million subscribers that “came” to the platform during the same period in 2021.
Netflix launched a cheaper ad-supported subscription in November and says it is “pleased with initial results”. In the first month of launch, only 9% of new subscribers bought it. Around the same time, it was reported that the streaming giant had returned some money to advertisers after it failed to reach its target audience. In December, according to Antenna, 15% of new subscribers signed up for this tariff.
The new subscription has some limitations, including no offline downloads, 720p video quality, and no content due to licensing restrictions.
“We’re not going to be bigger than Hulu in the first year, but hopefully in the next few years we can be at least as big. We wouldn’t be in this kind of business if we didn’t believe it could generate at least more than 10% of our revenue. And hopefully a lot more in the future,” said Spencer Neumann, Netflix’s chief financial officer.
In the past few months, the company has released a strong slate of content, including Knives: The Glass Bulb, Wednesday, and Harry and Meghan, which has helped Netflix fight off stiff competition from other streamers. Disney Plus launched an ad-supported tier last year and continues to attract subscribers to the Hulu and ESPN Plus bundle. Meanwhile, HBO Max had a record-breaking series premiere of House of the Dragon last year, followed by the debut of The Last Of Us, which drew 4.7 million viewers overnight.
2023 looks set to be a less bright year for Netflix as it has capped content spending at $17 billion, a cut that has already been reflected in a frugal movie lineup this year.
The company previously announced that its CEO and co-founder Reed Hastings is stepping down after 25 years at the helm of the company and will pass the baton to co-CEO Ted Sarandos and Greg Peters, the former chief operating officer of Netflix. Hastings is not leaving the company entirely, but will instead take on the role of executive chairman.
Netflix co-founder Reed Hastings is stepping down as CEO, but will effectively retain influence and control
Source: The Verge
