In a new letter, Netflix explains its reasoning behind cracking down harshly on password sharing and adding ads to the platform despite user pushback.
Netflix’s plan to eliminate password sharing may be a lot strict than expected.
In the streaming service’s fourth-quarter earnings letter, according to The Hollywood Reporter, the company stated that “today’s widespread account sharing (100M+ households) undermines our long-term ability to invest in and improve Netflix, as well as build our business. While our terms of use limit use of Netflix to a household, we recognize this is a change for members who share their account more broadly.” The letter went on to explain that the company will begin a staggered crackdown across various countries after the reporting of its first-quarter earnings, which usually occurs in April. The changes to account sharing are already in effect in places like Costa Rica, Peru, Chile Argentina, the Dominican Republic, El Salvador, Guatemala and Honduras.
Netflix’s co-CEO Greg Peters further elucidated the reasoning behind the company’s new business model, which includes the addition of ads as well as the push against account sharing. “Some of it is economically driven. Part of what we’re trying to do is make sure that we are being responsive to that and finding the right price points, whether in terms of the individual account or an extra member affordance,” he said. “And obviously the ad-supported plans give us a lower consumer-faced pricing in those countries where we have advertising.”
Netflix Shares How It Really Feels
Peters also criticized some individuals who share accounts, seemingly implying the practice can be considered a form of mooching. “Part of it is what we call casual sharing, which is people could pay, but they don’t need to and so they’re borrowing somebody’s account. So our job is to give them a little bit of a nudge and to create features that make transitioning to their own account easy and simple,” he stated.
Both Netflix’s stance against account sharing and its move to incorporate ads on the platform have been wildly unpopular with consumers, but the company appears adamant to stay the course. The letter explained that, based on the company’s experience in Latin America, it’s expected a spike in cancelations when the limitations on password sharing roller out to more territories. Despite this, Netflix is confident most users will transition to creating their own standalone accounts.
Netflix is home to iconic series like Wednesday, Stranger Things and Castlevania.
Source: The Hollywood Reporter
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