The concept of “binge-watching” has become almost synonymous with the act of streaming television shows and movies on popular platforms like Netflix. But as convenient as it is to have unlimited access to an extensive library of content, the practice of sharing login information with friends and family members who are not paying subscribers has become a thorn in the side of these streaming giants.
Netflix, in particular, has long been vocal about its desire to put an end to the practice of account sharing. In its latest quarterly results announcement, the company confirmed that it plans to implement a strategy to monetize account sharing starting in January 2023. The plan, which has already been tested in several Latin American countries, will allow customers to create sub-accounts for individuals who do not reside in their household. Each sub-account will have its own login, playlists, and content suggestions. Netflix will charge a fee for these sub-accounts, although the company has not yet disclosed exactly how much it will cost.
It’s worth noting that account sharing will still be allowed under this new system, as long as the subscribers are using sub-accounts. However, Netflix will use device geolocation to determine if an account is being accessed from outside the household, and will send a notification to the account holder inviting them to create a sub-account for their visitor. If the account holder does not create a sub-account within a certain period of time (which has not been specified by Netflix), the company may take further action.
While account sharing may seem like a harmless way for friends and family members to split the cost of a subscription, it does have a significant impact on the bottom line for these streaming companies. According to analysts at Citi Global Markets, account sharing results in yearly losses of around $6.2 billion for Netflix. Another analysis by CordCutting estimates the monthly impact at $192 million. Netflix’s Director of Product Innovation, Chengyi Long, has previously stated that account sharing limits the company’s ability to invest in new content, as it reduces the number of paying subscribers.
In addition to its plans to monetize account sharing, Netflix is also testing a new, low-cost subscription tier that includes advertisements. The company has not yet announced when this tier will be available or how much it will cost, but it is seen as another way for Netflix to increase its revenue without raising prices for its current subscribers.
It’s clear that Netflix is taking steps to address the issue of account sharing, but it remains to be seen how effective these measures will be. Some users may be willing to pay for a sub-account for their non-household members, while others may simply opt to cancel their subscription altogether. Only time will tell how these changes will impact Netflix’s user base and overall financial performance.