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Netflix lost 200,000 subscribers during the first quarter of 2022, and it predicts that it could be followed by another 2 million users in the second quarter. Netflix is trying its best to prevent it and increase its user subscriber base numbers, but all it sees is “slow growth” in its attempts. According to the letter it sent to its shareholders, one of the reasons that can explain it is the account sharing outside households, which is widespread globally. Netflix reports that over 100 million households do it. With this, Netflix adopted a new tactic that (hopefully) will encourage account owners to stop sharing their profiles with freeloaders: higher charges.
“Frankly, we’ve been working on this for about almost two years… a little over a year ago, we started doing some light test launches that…informed our thinking and helped us build the mechanisms that we’re deploying now,” said Netflix Chief Product Officer Greg Peters. “We just did the first big country tests, but it will take a while to work this out and to get that balance right.”
Netflix has already started the test in certain markets (specifically in Chile, Costa Rica, and Peru), but it plans to implement it globally this year. In the test, the original Standard and Premium account owners are offered to add “sub-accounts” to their subscription. These will be the accounts the paying subscribers can lend to individuals outside their households. The sub-accounts will have their own profile with personalized content recommendations, as well as login and passwords.
Netflix plans to use this to prepare freeloaders to soon establish their own accounts in the future in case the original account owner decides to separate the sub-account from the main one. When that happens, the sub-account will carry all saved data (viewing history, watch list, and personalized recommendations) to the newly established official subscriber account with its own billing info. This means its payment will be separated from the bill of the main account that created the sub-account. In Chile, the extra fee for non-household Netflix users costs 2,380 CLP, while it is $2.99 in Costa Rica and 7.9 PEN in Peru.
On the other hand, to answer the questions of those who are wondering how Netflix will determine account sharing activities, the company says that it won’t use location-based data for the job. Instead, it will utilize the information of the devices within the household like IP address, device IDs, and more.