Netflix is testing an extra fee for subscribers who share their login credentials outside their households.
The plan will be trialled in Chile, Costa Rica, and Peru, beginning next week. Adding an extra subscriber will cost 2,380 Chilean Pesos, or $2.97; $2.99 in Costa Rica; and 7.9 Peruvian Sol, or about $2.11. The company said it would take time to evaluate results in the three initial countries before considering a wider rollout of the fees.
The long-expected curb on password-sharing comes as Netflix faces a rougher path to adding subscribers and more competition than ever in the US. Netflix leads the field in streaming with 222 million global subscribers. The company insists it is just a fraction of the way to the total addressable market, but making money from those subscribers will be increasingly challenging as the service matures and the growth curve flattens, as is the case in North America. Price increases have been implemented in the US and Canada recently. Cracking down on password sharing is another lever Netflix can pull.
Newer rivals like Disney+ and HBO Max have taken a somewhat laissez-faire approach to password sharing, as have Amazon Prime Video and Hulu. Nonetheless, as programming costs continue to rise, there has been an increasing perception that companies will be less permissive, however delicate that may be. Last year, Netflix Co-CEO Reed Hastings said the company would test various approaches but wouldn’t implement anything that would “turn the screws” on customers.
In a blog post, product innovation director Chengyi Long wrote that Netflix has “always made it easy for people who live together to share their Netflix account, with features like separate profiles and multiple streams in our standard and premium plans.”
Over time, she added, that functionality has “created some confusion about when and how Netflix can be shared. As a result, accounts are being shared between households – impacting our ability to invest in great new TV and films for our members.”
Along with the option to pay to share passwords, subscribers who pay for the account extensions will be able to allow the newer subletters to transfer profile information, including viewing history and other personalised data.
“We recognise that people have many entertainment choices, so we want to ensure any new features are flexible and useful for members, whose subscriptions fund all our great TV and films,” Long wrote. “We’ll be working to understand the utility of these two features for members in these three countries before making changes anywhere else in the world.”
Leave a Reply