global streaming titan Netflix is tightening its policies in India, Indonesia, Croatia, and Kenya to restrict account sharing beyond a single household. This shift in strategy follows the successful enforcement of a similar policy in over 100 countries since May 2023.
Netflix reported a drop of nearly 1 million subscribers last year, prompting this latest move to recover lost revenue. The company now anticipates an uptick in its revenue for the second half of 2023. Earlier this year, the company enforced this policy in various regions, including the United States, Britain, France, Germany, Australia, Singapore, Mexico, and Brazil. The strategy proved successful, netting approximately 6 million new subscribers globally and a profit surge of $1.5 billion.
Under the new arrangement, the streaming service allows users to access their Netflix account wherever they are – at home, on the go, or on holiday. The service offers innovative features such as ‘Transfer Profile’ and ‘Manage Access and Devices’. However, customers sharing Netflix outside their immediate household will receive an update email, encouraging them to join the paid sharing feature. This feature offers users the option to share their Netflix account with non-household members at an additional monthly cost.
Netflix plans to soon implement this policy across all its markets. In a bid to entice non-paying users, Netflix has also rolled out “borrower” or “shared” accounts, allowing subscribers to add viewers at a higher price or transfer viewing profiles to new accounts. The company anticipates reaping the full benefits of paid sharing by Q4 2023.
In another significant move, Netflix has scrapped its cheapest ad-free plan in the US and the UK to bolster its ad-tier. The $9.99-a-month basic plan will no longer be available for new or rejoining members, although existing users can continue on it until they alter or cancel their subscription. The video streaming pioneer launched a $7-per-month option with ads last November in 12 markets, including the U.S., as an alternative to ad-free plans, aiming to boost customer numbers and diversify its revenue streams.
Macquarie analysts believe Netflix’s crackdown on password sharing will act as a catalyst to attract more users to its $6.99 ad tier base, generating higher advertising revenue. The company reported nearly 5 million active users per month on its ad-supported tier by May.
This strategic move by Netflix comes amidst fierce competition in the online streaming market. Investors worldwide are keenly waiting for Netflix’s second-quarter results, expected to be announced later today, which will shed light on the potential impact of the ongoing Hollywood strike on the company’s performance.
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