Netflix announced that it is expanding its market tests of charges to users who are sharing their Netflix accounts with households other than their own.
“Today’s widespread account sharing between households undermines our long term ability to invest in and improve our service,” said Netflix’s director of product innovation, Chengyi Long, in a post on the company’s blog.
Netflix monitors usage by device and IP address, so they know when sharing occurs outside home.
Charged sharing markets and model
In March 2022, Netflix launched its “add extra member” feature in Chile, Costa Rica, and Peru, for Standard and Premium plan members, for up to two people from outside the member’s household for the equivalent of US$2.99 per month. Those outside users get their own profiles, personalized recommendations, viewing histories and passwords, which can be transferred to new accounts if those users establish their own separate Netflix accounts.
Beginning in August, Netflix will introduce an “add a home” feature in Argentina, the Dominican Republic, El Salvador, Guatemala, and Honduras. Each Netflix account includes one home. The charge for additional homes on an account is also an equivalent to US$2.99. The number of additional homes allowed on a Netflix account is based on membership level: a maximum of one extra home on a Basic Netflix plan, two for a Standard plan, and three for a Premium plan
Users will ‘soon’ also be able to control where an account is being used.
Why it matters
Over time, Netflix’ stance on account sharing has evolved, and as it faces challenges by powerful competitors like Disney, Amazon and Apple, and subscriber losses of about 3.3 million across the US, Europe and Latin America year-to-date (through Q2). Paid account sharing as a way to offset the impact of those threats. A further threat, although the company has been tight-lipped about it – is piracy.
The company estimates that more than 30 million households in the US and Canada – and 100 million worldwide – share their Netflix accounts.
Netflix says that this model will evolve over time, as the company gains more experience in balancing revenue, subscriber engagement and