Netflix is struggling to recover from the economic crisis it is suffering, and for this it will launch its plan against shared accounts by the end of 2022. Advertising will also be an important part of the new stage of the platform.
For the first time in a decade, Netflix lost subscribers: up to 200 thousand, according to The Next Web portal. It should also be remembered that, by closing its service in Russia for showing solidarity with Ukraine after the invasion of February 24, it was left without 700,000 accounts.
In addition, the strongest stage of the pandemic, where staying at home was an obligation, it’s over. The service, therefore, is at its lowest hours.
The company’s expectation was to have 2,500,000 subscribers for this quarter. When not fulfilled, the alarms are turned on.
Netflix and the dilemma of shared accounts
According to the company, more than 100 million users worldwide use a shared password, including 30 million in the United States and Canada. Be warned that Netflix’s plan is not to freeze those accounts, but to set an additional fee.
Netflix CEO Reed Hastings delved into the issue on the first-quarter 2022 earnings call.
“We just have to get paid for them,” referring to the 100 million viewers who watch the service for free, according to a quote from CNBC.
The difficult thing will be to establish when the service is shared, for example, with a family member, and when it is not.
“If you have a sister, say, who lives in a different city, you want to share Netflix with her, that’s great,” said Greg Peters, the company’s chief operating officer. “We’re not trying to close that trade.”
However, “We are going to ask you to pay a little more to be able to share with her and for you to get the benefit and value of the service, while we get the revenue associated with that viewing.”
Other platforms such as Disney, Warner Bros., Discovery and Paramount have not made similar decisions, but it is possible that, if it is a monetary success for Netflix, they will continue down the same path.
In countries such as Peru, Costa Rica and Chile, a pilot plan was implemented: the additional monthly rate per country was 2.13 dollars, 2.99 dollars and 2.92 dollars, respectively.
Five years ago, Netflix encouraged password sharing, but the crisis changed everything.
Netflix advertising plan would help lower costs
Regarding the advertising plan, Hastings was more forceful.
“Those who have followed Netflix have known that I am against the complexity of advertising and I am a big fan of the simplicity of subscriptions,” the boss said during the call.
“But as much of a fan of that as I am, I’m a bigger fan of consumer choice, and allowing consumers who would like a lower price and tolerate advertising to get what they want makes a lot of sense.”
The more advertising Netflix adds, it is more likely that the prices of the service will not be so high.