Netflix is testing out another new way to make money off customers who share their password with friends and family. The new strategy, which allows users to pay to add another household to their account, has rolled out in several countries outside North America.
In the first quarter of this year, Netflix saw its subscriber count decrease for the first time in the company’s history. Now the streaming giant is scrambling to fix the issue before it loses its spot at the top of the global streaming pyramid. So far Netflix has fired over 300 employees and reduced their budget for original content, but their latest move is to try to recover revenue by reducing the number of people who use Netflix without paying.
In March, Netflix announced that they would start cracking down on password-sharing, but details were vague. Indeed, it seemed nearly impossible to enforce. How could they tell the difference between someone letting their friend use their account and a legitimate user simply watching Netflix on their phone at someone else’s house? Well, it seems we may have an answer. The big red N has rolled out a new payment plan in several countries in Latin America with an option to add another household to a streaming plan. Starting next month, users can legitimately add an extra home to their plan for a price much lower than full membership, according to Variety. For only 219 pesos per month in Argentina, and $2.99 in the Dominican Republic, Honduras, El Salvador, and Guatemala, users can add additional households to their account.
Those with a Basic Netflix plan can add one extra home, those with the Standard plan can add two, and those with a Premium plan can add three additional households. What this all amounts to, it appears, is sanctioned and paid (at a far lower price) password-sharing. Netflix has previously reported that thanks to illegitimate password-sharing, more than 100 million households worldwide have access to a Netflix plan without paying. If all of these households were to theoretically sign up using Latin America’s new “add a home” feature, that would mean an additional $3 billion per month for Netflix, or $36 billion a year. That’s a serious new market for the declining app.
The good news is that despite their almost threatening comments in March that they would crack down on password-sharing, it appears the streamer is still relying on the honor system. The “add a home” feature appears to be totally optional, and the greatly reduced price is meant to entice people with a carrot rather than a stick.
With the rollout of this new plan in Latin America, Netflix is dipping its toes in the water to test the temperature. They introduced a similar plan a few months ago in Chile, Costa Rica, and Peru, where users could pay a low fee to add one extra member (rather than an entire household). Subscribers in North America can expect that one of these two plans (or some variation) will soon be coming here as well, but take heart that it’s far more hospitable than was expected from Netflix.
Source: Variety