Earlier this week, Netflix shared its report confirming a decline in the number of subscribers. This was the company’s first decline in ten years and surprised investors in certain aspects. Obviously, the competition has become tough in recent years with more and more streaming video services popping out every day. Nowadays, there are large services from big companies that have enough resources to provide a stellar quality of service. Netflix acknowledged the growing competition in its report, as well as the recent loss of the Russian market in light of the sanctions. However, for Netflix, the biggest culprit is uncontrolled non-monetized account sharing. The company promised to “effectively find a way to monetize account sharing”. However, the investors are skeptical about this “holy war”.
Shortly after the announcement, the company saw a drop in the value of its stocks. The company’s stock was down 36 percent in trading Wednesday, just one day after the announcement. The company said on that occasion, that it would ask subscribers who share their accounts with people outside their households to pay more. Netflix blames password sharing, in part, for failing to hit its subscriber growth targets. The company believes that there are 100 million accounts around the world sharing their passwords with other households.
The fight against account-sharing can cost more subscribers to Netflix
The Media Analyst Michael Nathanson wrote that the crackdown on password sharing signals Netflix thinks it’s “hitting a wall” at 221.6 million subscribers. “Any company with large out-year subscriber and (revenue) targets should be a bit more nervous today,” he wrote.
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The company’s Chief Operating Officer, Gregory Peters, told investors that the company would not stop a subscriber from sharing with a sister. However, the company may ask this user to pay a bit more to be able to share with the sister, so she will get the benefit and the value of the service.
However, the investors are very skeptical about this change. According to analysts, Netflix may be able to squeeze a few more dollars out of some of the primary households. However, there are ones that will look at the new sharing fee as another pricing increase and will cancel. Netflix recently announced a price hike in certain markets, and several users canceled the service shortly after that. Some analysts don’t even believe that password sharing is the big culprit of Netflix’s loss of 200,000 subscribers in its first quarter. In fact, password sharing is something that happens for years, and just now Netflix is blaming this feature.
Honestly, Netflix seems to be seeing the effects of the growing competition. Also, its pricing-plan policies are really outdated right now. It’s absurd to put a higher paywall for HD and 4K content when other companies are offering this for cheaper prices.