During the first-quarter earnings, Netflix decided to cut down on password sharing. And more crucially, to profit from those more users, became further evident. As Netflix considers how to monetize users who share passwords with other homes. A new study finds that Americans’ reactions to a $3 monthly price per additional out-of-home user differ. Combining Netflix’s high rates and now shifting in policy over password sharing might cause the company some of its subscribers.
Let us take a look at whether a password crackdown will be profitable or not.
Password Sharing will cost Netflix subscribers
Aluma’s research indicated that if Netflix charges $3 per month for extra out-of-home users, 13 percent of adult Netflix subscribers would terminate the service. While 12 percent would likely add at least one out-of-home user who would otherwise go unmonetized.
Netflix has begun testing a new format in three Latin American countries for $3 per month per additional home.
However, while 13% of poll respondents stated they would cancel, Aluma’s Greeson estimates that only around half of those would. The analyst has an excellent idea of how intention translates to action after 20 years of consumer research.
Furthermore, “Netflix is a highly regarded service relative to its competitors,” Greeson says, stressing that it’s one of the criteria he evaluates, implying that the number of people who really cancel will be fewer.
According to Aluma, individuals who will add at least one $3 per month user are more likely to do so since two-thirds of those sharing passwords borrow from immediate family members, such as a father to son or vice versa.
If users are charged more for Netflix password sharing, it may stimulate interest in a lower-cost ad-supported tier. Both will be launching in 2022 or 2023. Greeson feels, “For some, the ad-supported tier will make sense.”
He also mentions that the $3/month may interest some people or their own $15/month subscription. But the main idea is that freeloaders have several choices for not abusing the service.
What are your thoughts on the increase in Netflix’s fees? Do share your answers with us in the comments.