Netflix is one of the largest streaming platforms in the world. A pioneer in streaming who founded the industry, regardless, it has seen a lot of success, but last year after months of experimenting, it was leaked that Netflix might end password sharing.
Paid Password Sharing
Netflix would do this by what they are calling Paid Password Sharing. It can be seen as one of the most significant changes the company has made. They made this change because it cost them money that they could have invested in another program. As it experimented on in Latin America, this would mean that people can use the password if they live in the same house (or household).
Netflix intends to take information from the user's IP addresses, Device information, and other information from the devices – access to which is included in the terms where they would previously use this data to show the user desired content. This information will allow Netflix to know if a user is using the account from somewhere else.
Sometimes you may travel and have to log in from anywhere other than home. In this case, Netflix suggests asking for a code. This four-digit code, when entered, will give you access to the account but only for one week.
Netflix also intends to block a device if it hasn't been logged in for 31 days. A user must log in or verify their credentials multiple times to verify the right person is using the account.
Netflix was aware that introducing Paid Password Sharing would have its detractors. Netflix's Chief Operating Officer (COO) also warned the investors that there might be cancellations as the decision will only be popular with some. But they intended to make up for the losses in the future.
It turned out correct, as during the first few months of 2022, Netflix experienced record cancellations. The cost of deals was increased to eliminate this practice. Netflix also introduced a new, much cheaper Ad Tier. Predominantly because of this, the company experienced a surprising, unexpected increase in subscriptions at the end of 2022.
Netflix Slashes Prices
The investors breathed a sigh of relief as Netflix got back in the game as the revenue increased with back-to-back subscriber growth in the latter half of 2022. It is why the investors were surprised when the company made the head-scratching decision to cut their prices.
According to the walls Street Journal these price cuts will range from 20% to 60% and will be put in place in about 30 countries. However, they will not be extended to Netflix's larger markets.
Netflix intends to take Paid sword Sharing out of the experimental phase and implement it in other countries. Because of this, there will be added subscription cancellations and losses. The corporation should strive to compensate for the losses at this point, so cutting pricing makes little sense. It is also a last-ditch attempt by the company to boost the number of members. Why Did Netflix Slash Their Prices?
Netflix had the highest number of subscriptions at the beginning of 2022; therefore, it can be understandable why they cut them. This decision by the streaming giant can be a genius move or one that would be detrimental to it. But then another question is why so many cancellations forced the company to make this move.
- Current State of the world – Nowadays, everything is expensive as some people are saying that we might be headed towards (or we are living through) another recession. People are becoming cautious of where they are spending their money. They might not want to spend additional money on a streaming service, especially with the added rules and regulations of verifications and Paid Password Sharing.
- Competition – Another reason people might prefer to cancel their subscriptions is that now they have options. In the past, Netflix was the only streaming service, and it practically forced other companies to invest in their streaming platforms. With new services like HBO Max, Disney Plus, Amazon Prime Videos, etc., people might watch another service.
- Privacy – Netflix will have access to your device's IP Address, Device information, and other activities you do on your device. The corporation should strive to compensate for the losses at this point, so cutting pricing makes little sense. It also appears to be a last-ditch attempt by the company to boost the number of members. But now, it is more well-known, and people are more cautious about their online footprint, meaning they don't want a company to know where or what they are doing.
- Low-Quality Content – One other reason can be the lack of quality content in the platform. Netflix has come out and stated that they are trying to stop password sharing so that the added revenue can go to producing quality content for its consumers. Also, as mentioned above, the competition is high. With other platforms creating arguably better content, people would much rather pay and watch them.
At a glance, it might be a wrong and desperate decision to cut the prices, but it can also be a genius. Only time will tell if it is the right one or not.
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