The latest development in Netflix’s plans to dissuade account sharing has surfaced via a quarterly earnings letter. It reveals extra charges for each separate user on the account of the owner, that isn’t from the same household, starting 2023.
While the final rates have not been officially announced, what we can infer from the document is that the charge will be up to a quarter of the initial basic rate. That would result in about a $3-4 charge per user outside of the household.
Netflix began its crackdown on unauthorized account sharing earlier this year. What started with tests of account verification in the style of 2FA (2-factor authentication) and device count limitations ended with the creative workarounds as provided by the Internet.
The tests had caught the attention of many users online, some of whom even shared their plans on how to circumvent the possible limitations via tricks as simple as “I’ll just text them the verification code”, while others provided their own take on solutions that Netflix should adopt.
We can’t say if the Internet’s reaction had an impact on the decision, it was clear that a change of plans was needed. After all, Netflix’s estimated loss from account sharing is around the $6 billion mark, as per Citi analyst Jason Bazinet. From Netflix’s point of view, that is a sum that should flow in naturally from actual user subscriptions.
While that does seem fair, let’s check in with Netflix’s competition:
How these will measure up against Netflix’s decision will become clear once we truly find out how the term “household” is defined and when the penalty is live.
Netflix is still the major player on the market with over 220 million active users. Now, imagine if account sharing would cease? Those numbers would jump significantly, with a doubtless positive business effect, given Netflix’s recent financial troubles.
It’s worth pointing out that the company is also making it easier to detach your profile from a shared account. Earlier this month, Netflix announced a profile migration tool, which allows users to keep their settings when creating their own subscription.
Also, set to release in November, is a cheaper, ad-supported plan for $6.99. All of these announcements point to Netflix trying to gently nudge users into creating separate accounts, instead of sharing.
Regardless of financial reports or planned actions, at the end of the day, Netflix are the trendmakers of the video streaming scene. Their actions are sure to stir up the market and it would be interesting to see how competitors react to Netflix’s decision.
