In light of Netflix’s subscriber losses, the company announced today during its first quarter earnings call that it will expand its test that charges members a higher price if they share accounts with people outside their household. The company first began testing the feature in Chile, Costa Rica and Peru in March, but now says it plans to roll out the solution in global markets, including the US, in about a year.
The streamer clarified that it will need to continue iterating on the feature for about a year or so, to ensure it strikes the right balance in terms of how much extra to charge subscribers who have shared their Netflix account with other users. outside their own household.
“Honestly, we’ve been working on this for almost two years now…. A little over a year ago, we began running a number of light test launches that… informed our thinking and helped us build the mechanisms we deploy today,” explains Netflix Chief Product Officer Greg Peters during the earnings call. . “We have just done the first major country tests, but it will take some time to work this out and get the right balance.”
Currently, Netflix’s Standard and Premium subscribers in the handful of test markets are getting the ability to add “subaccounts” to their service for people they don’t live with. Each subaccount has its own profile and personalized recommendations, but they also have their own Netflix login and password. This allows them to become an established member with their own account in the future. If they choose to take that step, their Watch History, Watch List (“My List”), and Personalized Recommendations will be transferred to their own account with their own billing information. (And since the member sharing their account now has to pay more, they can choose to remove the freeloader from their account when the new charges go into effect.)
Netflix had previously said that this solution does not rely on location-based data, such as GPS. Instead, it uses the same information it uses to provide its service to its end users today, including an IP address, device IDs, and other information about devices logged into the Netflix account across the entire household. This method allows Netflix to identify when sharing is ongoing outside of a household.
It noted that the subaccounts do not count as subscribers while they are still in the process of sharing accounts with another household.
Today, Netflix estimates that approximately 100 million households worldwide share their user accounts, and more than 30 million of those are located in the US and Canada alone.
Netflix says that by asking members who share their accounts to pay more, it hopes to strike the right balance between still allowing sharing while generating revenue for everyone watching and getting value from the service. The actual dollar and cents that will translate “value” is of course yet to be determined – and may vary by market.
In the test markets, the additional cost for non-domestic members is 2,380 CLP in Chile, $2.99 USD in Costa Rica and 7.9 PEN in Peru. This is less expensive than a full Netflix account plan, but it’s also more than it used to cost to share someone’s Netflix account for free.
This isn’t the only way Netflix wants to monetize its subscriber base. The company also said it will introduce an ad-supported plan.