Netflix Password Sharing Crackdown: After Netflix disclosed this week that it had lost subscribers for the first time in a decade, it raised the possibility of a global crackdown on password sharing. Users might be charged a fee if they share their accounts with others outside their family.
[Gaming]The worldwide streaming titan lost 200,000 members in the first three months of the year, well short of its target of 2.5 million paying clients. In early March, the company lost 700,000 members as a result of its decision to discontinue operations in Russia.
People throughout the world were trapped at home and went to their screens to binge-watch series and movies in the early days of the pandemic, according to Netflix, which now has 221.6 million members.
However, password sharing and intense competition from other streaming services have made it more difficult for Netflix to attract new subscribers.
The company said it will take a variety of additional initiatives to boost subscribers and reduce income loss, including charging users a price for sharing passwords and providing a cheaper, advertising-supported plan.
Here’s what Netflix subscribers can look forward to in the future.
Netflix Crackdown on password sharing
[Gaming]Netflix said in a letter to shareholders on Tuesday that more than 100 million households use the service but do not pay for it.
Netflix admitted that allowing users to share their passwords resulted in more people becoming addicted to the service. However, increased competition from Amazon Prime Video, Hulu, Disney+, and other streaming services has made it even more difficult for the corporation to grow its subscriber base.
[Gaming]“Our relatively high household penetration — when including the large number of households sharing accounts — combined with competition, is creating revenue growth headwinds,” Netflix wrote in its letter.
Netflix revealed last month that it will start experimenting with ways to charge subscribers in Chile, Costa Rica, and Peru who share passwords a fee for the additional members.
Executives stated on the company’s results call on Tuesday that this approach may be expanded to other countries, although it was unclear when those changes would take effect.
Netflix may start cheaper ad-supported service
Netflix co-founder Reed Hastings has strongly opposed advertising, but the company changed its mind on Tuesday.
[Gaming]“Those that have followed Netflix know that I’ve been against the complexity of advertising and that I’m a big fan of the simplicity of subscription,” Hastings said in a recorded interview. “But as much as I’m a fan of that, I’m a bigger fan of consumer choice. And allowing consumers who would like to have a lower price and are advertising-tolerant get what they want makes a lot of sense.”
Hastings related Netflix’s choice to accept an ad-based membership model to the streaming service’s competitors, implying that the ad-targeting might be outsourced.
“In terms of economic potential, the internet ad industry has improved, and you no longer have to provide all of the information about people that you used to,” says the author “he said “We can keep out of it and focus on our members and providing a fantastic experience.”
Some Wall Street experts, including Rich Greenfield, partner and media and technology analyst at LightShed Partners, were skeptical of the switch to advertisements. He predicted that introducing adverts will result in decreased daily viewing time per user and, as a result, more user turnover.
“The issue with Netflix and advertisements is whether this is the solution they actually believe in, or is it desperation from a management team that doesn’t understand what’s going on with their company right now?” In a message to customers, Greenfield wrote
Netflix to Pulling back content spending
[Gaming]Netflix claimed it would “hold down” expenditure on movies and TV episodes in order to boost income even further.
In a taped interview, CFO Spencer Neumann remarked, “We’re dialing back on some of our expenditure increases across both content and noncontent spend.” “We’re trying to be wise and sensible about it, reining in some of that expenditure increase to match the reality of the business’s revenue growth.”
[Gaming]Greenfield, the Wall Street analyst, believes the action is important but may be insufficient.
“The single most important issue that was mostly ignored is that Netflix’s content, particularly its English-language content, is simply not resonating in relation to the degree of investment,” he wrote.
Netflix presently spends more on content than any of its competitors, according to Greenfield, at $17 billion per year. While that amount of investment should undoubtedly be cut, Greenfield believes Netflix should reconsider its content approach more widely.
[Gaming]“By better, we don’t mean better in the sense of quality; we mean material that captures the zeitgeist, whether it’s ‘The Crown,’ ‘Stranger Things,’ ‘Squid Game,’ or ‘Tiger King,'” he explained.
“While the degree of consumer appeal of Netflix content has always been significant, the requirement for ‘better’ material has grown considerably more crucial in the last two years as the level of competition has increased,” Greenfield added. “Having a large quantity of ‘good enough’ content is no longer sufficient.”
