Netflix may well be able to monetize a substantial amount of its password-sharing users — at least in the U.S. market.
Variety Intelligence Platform partnered with CRG Global for a survey of 504 U.S. Netflix users, 143 of whom use someone else’s account. The survey found that significant majorities of those users would be willing to either pay full price for their own Netflix subscription, or, if they already do, to pay a higher price to continue sharing their password.
After its global subscriptions declined for the first time in a decade, Netflix accelerated plans to roll out a new pricing strategy aimed at cutting off freeloaders by the end of the year. It’s a notable change of tone for Netflix, which tolerated and even encouraged password sharing for years. But with its stock price way down and the pressure on to change course, all potential sources of revenue are now on the table.
The survey data indicates 64 percent of users who access someone else’s Netflix account said they would be willing to pay for their own subscription if they were forced to do so. Among those who share their password, 71 percent would be willing to pay a higher price to continue the practice. It’s a much bigger percentage of the market than many analysts (including this one) have predicted could be enticed to pay, on both sides of the equation. Perhaps Netflix is not quite so doomed as the whirligig of bad press has suggested.
Restricting password sharing could provide some additional revenue for Netflix. The proposed price hike to allow the practice is, in theory, a smart move that would let the widespread sharing continue while squeezing a few extra dollars out of subscribers. There’s also a substantial population of freeloaders out there: Netflix estimates more than 100 million households worldwide, including 30 million in the U.S. and Canada, are using someone else’s account.
Netflix has 74.5 million paying subscribers in the U.S. and Canada as of April 2022, meaning the service is accessed by about 104.5 million households in total by the company’s estimate. Therefore, 30 million households would constitute about 29 percent of Netflix’s total users in this market. Of the users surveyed, about 29 percent said that someone else pays for the Netflix account they currently use.
There is, of course, a ceiling on the number of freeloaders Netflix can convert. Of the users who said they would not be willing to pay, nearly a quarter said nothing would convince them otherwise. But others appear persuadable — with significant changes to the service.
More than half of those users cited the platform’s content library as an area for improvement, with more than a quarter calling for better original content. Notably, even more wanted to see a larger catalog of non-original movies and TV shows. These responses reflect the shrinking (albeit still sizable) demand for Netflix’s library, which currently faces a dwindling supply of buzzy hits with many of the most in-demand titles soon ending their runs.
Netflix’s cost, predictably, is also a major factor among the users unwilling to pay for it. The streamer now plans to roll out a cheaper subscription tier with advertising by the end of the year. Consumers do not seem enthused by the prospect of ads, but a majority of those surveyed said a lower monthly price, with or without ads, would convince them to shell out for Netflix.
The trick will be implementing those changes. There are still scant details available about Netflix’s plan for advertising, and its experimental password-sharing crackdown is reportedly off to a less-than-great start.
In March, the streamer started testing a plan to let subscribers in three countries — Chile, Costa Rica and Peru — add accounts for up to two people outside their household for an added surcharge. According to a recent report by Rest of World, the policy’s implementation has been uneven, with some customers able to bypass the new charges and others confused over Netflix’s definition of a “household.”
Some have already canceled their subscriptions in frustration. Obviously, the point of rolling out this plan progressively is to allow time to work out its kinks, but these issues do underscore the risks of alienating consumers.
Still, Netflix remains valuable to many of its users, as the survey data indicates. The company’s dominance of the streaming space is starting to ebb, but its decline will likely be much slower than its stock-market drop.