An analyst claims that Netflix’s decision to improve the police password share could be beneficial to the streamer.
Netflix this week sent a message to multiple accounts with multiple users and threatened with a service outage if they illegally shared passwords, but offered the incentive to offer a free 30-day trial in certain areas. The message reads: “If you do not live with the owner of this account, you will need your own account to continue viewing.”
Netflix said the move was “designed to ensure that people using Netflix accounts are authorized to do so.”
The research firm Magid claims that 33% of Netflix users share their password with at least one other person. This led one analyst to applaud the attempt to cut off the freeloaders while discounting the negative consequences of such actions during a pandemic that left many people at home and unemployed.
Related story
‘Russian Doll’: ‘House Of Cards’ – Actress Carolyn Michelle Smith will repeat in season 2 of Netflix series
“It’s pretty hard to estimate its impact, but my sense is that it would have a net positive effect in the long run, because I think the number of password participants is currently a pretty significant number,” said CFA analyst, Tuna Amobi, said. Yahoo! Finance.
‘There will be an immediate negative impact on the fluctuation. ‘It’s very easy to see how part of the impact would stop in terms of potential uptake of certain customers affected,’ he said.
Amobi suggested that the suppression is a loyalty test that could offend those who get the service for free to sign up themselves.
Netflix is far from needy. The company’s revenue in the fourth quarter of 2020 amounts to more than $ 6.64 billion US, compared to just over $ 1.18 billion in the corresponding quarter of 2019. Netflix estimates that they will spend $ 19 billion on content this year.
However, in a report earlier this year, the research firm Parks Associates linked the total losses by streaming services by sharing passwords to $ 9.1 billion, and it would estimate that the figure will reach $ 12.5 billion by 2024.
“While this poses risks, I believe it would not be radically different from what other service providers are currently doing,” Amobi added. He warned that ‘family users’ should be treated lightly, but added:’ Hopefully they can come up with something to track down the real abusers, but that’s not rocket science. There has always been a solution to this, but I was surprised that it took them so long to get there … I thought it was overdue. ‘
The number of accounts that can flow simultaneously is taken into account in the price of subscriptions. The Basic $ 9 plan allows only one device to stream, while the Standard plan at $ 14 doubles it and the Premium level increases it to four devices. According to Netflix’s Terms of Service, a subscription is ‘for your personal and non-commercial use only and may not be shared with individuals outside your household.’
The possible suppression has implications beyond the sharing of passwords. It is considered an account verification test, and can therefore also be used for security or fraud prevention. Netflix is known for performing hundreds of A / B tests a year among its more than 200 million subscribers worldwide for a wide range of product features and monetization tools.
Dade Hayes contributed to this report.