Netflix announced that it lost subscribers for the first time in the first quarter of this year, and that it’s working on cracking down on password sharing – which contributes to the company missing out on profits. In March, the streaming giant announced that it would roll out a trial in Peru, Chile, and Costa Rica to see how users react to the new program. The changes would require users to add additional accounts for an extra $2-$3 per person.
According to a new report from Rest of World, Netflix subscribers based in Peru were not made aware of the password-sharing program. Since the trial started in March, the report claims that Netflix didn’t notify its users either by email or with an in-app notification.
The publisher also found that Netflix’s enforcements varied from user to user. Some reported that they didn’t get any penalty for ignoring the prompts to purchase additional household member spaces. Some users were prompted to pay up, and as a result, they have straight-up canceled their subscriptions. Others were not even made aware of the trial program and continued using their shared accounts with multiple households without warning.
The lack of clarity around what Netflix determines as a “household” also left some customers confused, as some considered their immediate family members as part of their household. What’s worse is that a customer support representative in Peru also confirmed the following:
“The anonymous customer service representative said that she was instructed that if a subscriber called arguing that someone from their household was just using the account from another location, she should inquire further and tell the subscriber that they could use their account without extra charge via a verification code.”
Netflix clarifies on its website that a single account may be used by other people of the same household, but not outside of it. This applies to people living under the same address, and presumably the same building, using the same connection.
“A Netflix account is for people who live together in a single household. This single household is the Netflix household and is associated with the primary account owner’s devices and the devices used by other people who live in the Netflix household.
When a device outside of the Netflix household signs in to an account, we may ask the primary account owner to verify that device before it can be used to watch Netflix. We do this to confirm that the device using the account is authorized to do so. This helps our members enjoy Netflix while they’re traveling or visiting friends or family, and when using devices for the first time.”
Will cracking down on password-shared accounts help Netflix?
The trial program is currently running at places where subscribers are more vulnerable to price increases, and might not be able to pay additional fees to new member accounts. Additional accounts vary between $2-$3, and users can add up to two users outside of their household.
It’s also a well-known fact that causing additional and seemingly unnecessary extra steps to charge customers may not go down well with users, and some might end up canceling their subscription altogether. The effects of the new change could turn even more users against Netflix and result in bigger losses.
Netflix didn’t share any information about the trial, and we’re uncertain about the length of the program. If the streaming giant manages to solve the current issues, it may run it elsewhere in the world to receive feedback from other users. Suppose the new policies and programs come into effect in most other regions. In that case, it could result in people losing access to their shared accounts, and it could prompt millions of users to cancel their subscriptions, which could negatively impact Netflix’s business.
In the long term, once the new rules are in effect, and users are aware of the new system, it could be beneficial to Netflix, as it could slowly start gaining more revenue from a single user. It still wouldn’t be as profitable as if it forced accounts to sign up for an entirely new subscription plan, but it could undoubtedly help its business. Cracking down on shared accounts has a lot of benefits in the future, but it will almost certainly hurt Netflix’s future revenues.
Do you plan on canceling your Netflix subscription if the company prompts you to sign up for new member accounts? Let us know in the comments!