Netflix’s Effort To Thwart Password Sharing Is Already A Bit Of A Mess
from the annoyance-isn't-innovation dept
Back when Netflix was a pesky upstart trying to claw subscribers away from entrenched cable providers, the company had a pretty lax approach to users who shared streaming passwords. At one point CEO Reed Hastings went so far as to say he “loved” password sharing, seeing it as akin to free advertising. The idea was that as kids or friends got on more stable footing (left home to job hunt, whatever), they’d inevitably get hooked on the service and purchase their own subscription.
But as Netflix subscription numbers have begun to go south and competitors are challenging Netflix’s market share and revenue, the company is predictably taking a harder stance on the practice.
The company recently announced it would be testing a new system that would impose additional fees on an account holder if Netflix can see that the account is being used outside of the account owner’s home. Netflix hasn’t explained precisely how this will work, only that it’s testing the effort in Chile, Costa Rica, and Peru, where users who share accounts now have to pay around $3 more a month.
But there’s already trouble in Netflix’s deployment of the program. RestofWorld notes that messaging, implementation, and enforcement of the program in Peru has been a “mess,” leaving consumers confused as to what the hell Netflix is actually doing and regulators eyeing an intervention:
For some, the price increase has been enough to convince them to cancel their Netflix accounts outright. Others continue to share their accounts across households without any notification of the policy change or have ignored the new rule without facing enforcement. Overall, the lack of clarity around how Netflix determines a “household” and the differing charges levied on different customers have left subscribers in the trial confused, risking action from consumer regulators.
As the report notes, Netflix appears to have thought it would be a good idea to test these added hikes in smaller markets with more low-income households that are already struggling to afford basic services. All because Netflix executives want to claw back some revenue from a practice industry executives previously and repeatedly made clear wasn’t that big of a deal.
Streaming providers like Netflix already limit the number of maximum possible concurrent streams by each account. And there’s no guarantee that users harassed with additional warnings and fees will automatically decide to sign up for their own account — as opposed to just signing up for any of a growing number of cheaper Netflix competitors like Amazon Prime, Hulu, Disney Plus, Paramount Plus…
Netflix reported its first subscriber loss in a decade back in April due to a number of factors, including competition, customer dissatisfaction with program selection and quality, and a recent significant rate hike. Imposing yet another poorly messaged rate hike on top of its existing headaches likely isn’t the winning subscriber-boosting strategy many Netflix executives seem to think it is.
Filed Under: cable tv, competition, fees, password sharing, price hikes, streaming, video
Companies: netflix
Comments on “Netflix’s Effort To Thwart Password Sharing Is Already A Bit Of A Mess”
Problem: Sinking ship. Solution: Add more holes to the hull
Exec 1: It’s not looking good. Competitors are springing up left and right, our recent price hike went over like a kick to the groin and our content line-up is about as popular, all of which had led to a drop in customers we haven’t seen in a decade and more importantly a threat to out profits. Ideas?
Exec 2: Have we considered nickel and diming anyone left by adding on another fee?
Exec 3: Wouldn’t that just ramp up the exodus of customers and make people less likely to sign up in the first place?
Exec 2: In the long run sure, but in the short term it’ll allow us to boost our profit margins by adding in a new revenue stream without actually doing or changing anything.
Exec 1: I love it, start small so we can gauge just how much we can crank up the price and leave open the door to throw someone under the bus for the ‘faulty pricing’ if it goes over too poorly.
Re:
The problem seems to be more investors rather than execs. Netflix still grew recently, they just didn’t meet expectations due to a slight drop in US numbers, and them blocking Russia. Globally, they still grew. Growth is steady and still happening, they just didn’t meet targets set before things happened to change expectations.
But, investors not only want infinite growth, they want easy solutions to difficult problems. So, “we are facing massive competition that literally didn’t exist 3 years ago” and “we don’t have the same catalogue of existing IP to build instant new franchises from like Disney has” won’t be accepted.
This means “easy” solutions like cracking down on password sharing and VPN usage, creating an ad tier, and spending less money on new IP that might not be instant hits but will still drive traffic are the things they want to hear. There’s no way to reach these solutions without damaging long term growth, but investors only care about this quarter.
I suspect the same investors would have been having fits over the idea of shifting from discs to streaming, from ever increasingly damaging licencing deals to original content, etc., but a company the size of Netflix eventually loses the ability to say “screw the investors” when the dream of infinite profits is proven to be the fantasy that it is.
Stop behaving like controlling where people use the service actually matters.
I remember a poster who talked about his 4 user account, when he only wanted 3.
He is paying to be able to access Netflix’s catalog 4 times at once.
Trying to pretend that people are always in their home when they access Netflix is stupid.
I’ve got a half hour at lunch, lemme watch an episode at the lunch table.
My kids in with the doctor, lemme watch an episode to pass the time.
If an account isn’t using more streams than they pay for, stop being assholes.
Did y’all learn nothing from the old cartels war on trying to control where & when people could listen to music or watch videos they “owned”??
It ends fucking poorly for the company, not the customer.
You are replaceable, we have many more options than before, and if one of them decides to just bill for streams without trying to dictate how big the screen can be, where you are allowed to use it, only that you can not have try to use streams than you purchased… well y’all are gonna be burned at the stake by the shareholders.
Explain to them that Covid is over, inflation is here, and Netflix is a fucking luxury that if you start the nickel and dime bullshit you learned from cable… they are going to have much less shareholder value because you can’t force customers to take it in the ass & pretend they can’t go elsewhere. The exodus will be a large sucking sound as you still paid to have exclusive content to show the dwindling number of people who haven’t looked at a credit card statement in years.
Re:
Cable at least makes it difficult to cut, Netflix is month to month. Netflix has taken the financing model of cable, but forgot why it took so long for cord cutting to take off – long contracts and a willingness to give deep discounts while on contract. Netflix doesn’t have either.
Re: Re:
There were no other cable companies to jump to, there are many other streaming services now and if just one of them says stream your account everywhere you go that might be enough to get many people to leave Netflix.
People will remember the very bad taste in their mouth the next time there is a NF show they want to see if NF keeps up with the control insanity.
Record Quarterly Profits More Important Than The Service Provided
Netflix became a juggernaut by being a “Good Deal”. That’s a good business model to have. Then they started raising prices for no discernable reason. It went from a “Good Deal” to a “Tolerable Deal”. The problem with that is now you’ve added line that, if you cross it, will lose you customers.
Netflix lost 200k subscribers from a total of 200+ million subscribers. It still rains money at Netflix HQ. So, as a consumer, when a company that makes billions of profits a year starts nickel-and-diming me because they had one bad quarter, that’s pushes me one step closer from the “Tolerable Deal” line to the “Terrible Deal” line.
Might be better for my bottom line
Getting flagged for password sharing when I’m not and getting dinged with a new fee would be a pretty big middle finger, so it got me thinking: what will I might miss about Netflix if that happens and I want to rage quit?
And that got me thinking: why am I paying for Netflix now?
I remember when Netflix first start streaming there was a limit on the number of devices linked to your account… 4 or something like that. I think this limit was a requirement by the license holders.
What NF might do is somehow track which devices login on your account. For example… devices in you home never leave and will always come from the same location. Mobile devices might login from the home location and remotely and would be ok. It would be devices that have never logged in from the home location that would raise a red flag.
Re:
That seems like a reasonable guess about how that might work, and if they provided an explanation like that, it might help.
As it stands, it’s pretty close to “you have nothing to worry about if you have nothing to hide.” So weird that people aren’t cool with that…
Re:
Don’t fall for the “they made us do it” line. In many cases Netflix is the licensor, and could let people view their stuff under whatever terms they want. Then there was the case of Nina Paley, a copyright holder who tried to license a movie to Netflix for free on the condition they exempt it from DRM, which they refused to do. Anyway, Netflix joined the MPAA a few years ago, at which point the “us vs. them” narrative really fell apart—they’re officially on the same side now, which is not our side.
Netflix doesn't want me to get my own account
I’ve been actively trying to stop sharing with my family. I want my own account! But Netflix provides a terrible experience for doing that. There is currently no way to migrate my history and preferences to a new account. The profile transfer feature is currently unavailable in this country, so in order to get my own account I need to not only pay them, but also start over with years of history and preferences.
Netflix seems to recognize that the data that it associates with me has value; they did after all famously run that $1M contest back in the day to improve recommendations. So it’s not just that this data has value to them, but also it has value to me. I’m surprised they don’t think I’d want to keep it around.
Why not start with the low-lying fruit? let people move their darn profiles to a new account! I bet they’d get some switchers even without adding the “incentive” of a penalty for password sharing.
It reminds me of the piracy “debate”. For me, it’s easier and more convenient to stay sharing an account, even though I would be willing to pay for a new one. They’re giving me a negative reason to buy. Yet they’re focusing on enforcement, assuming I’m just a mooch. But I want out! Just make it easy for me to switch!
Reed should adopt the Comcast model
If Reed is looking for more fees to tack onto users’ bills, Comcast has done the work for him:
BROADCAST TV FEE,
REGIONAL SPORTS FEE,
REGULATORY COST RECOVERY,
FRANCHISE FEE,
MAINTENANCE FEE,
FEDERAL UNIVERSAL SERVICE FUND,
Taxes & government fees,
STATE & LOCAL EXCISE TAX,
911 FEES
Re: Some more fees they can consider
Don’t forget these:
A fee for paying online, even though they don’t accept physical payments.
A product enhancement fee to further their research and development, even though this is what your monthly bill already pays for.
A fee for collecting other fees.
And of course the “because we can” fee.
Netflix insisted I was a foreigner
I needed to talk to Netflix tech support because my credit card had been suspended due to suspicious activity, ebay purchases, so my payment was refused. After clearing that up, I was trying online to get Netflix to just resubmit the payment and it wouldn’t work. So I resorted to chat with tech support and they said the account was being used in another country [not USA which is where I actually live] and I would have to cancel my account create a new one from my home country! Turns out my browser and only the browser was connecting through a VPN, something I v v rarely do. As I tried to tell them ALL of my netflix use was from my home IP which is static FFS, that I didn’t even know how to connect through a VPN for my non-PC devices [yes I could figure it out but had no need or desire to and I only use netflix through ROKU or the TV]. I’m sure they could see that was true, they log such things, but it didn’t matter. She refused to believe I wasn’t lying and nothing I could do would convince her otherwise. I almost canceled my account but instead just ‘hung up’ on her and the payment went through the next day.
Essentially, they were trying to fuck me for the crime of proactively trying to fix a problem so I could give them my money as expeditiously as possible. This one-time chat from a VPN determined which country I lived in overriding years access from a single US-based IP. This ain’t a good way to retain customers.
Re:
Once the bean counter get it in their heads that their losses are caused by this 1 thing, it is very hard for them to accept that this is not true & that there are cases where what they detect is wrong.
See also: RIAA, Copyright Trolls, Courts, Hollywood, et. al
I know how this goes...
I’ve worked for a living for long enough to guess how all this went down.
A couple months back, Netflix looked at their subscriber data and realized they were in for stock-price armageddon. So they called an emergency meeting to brainstorm solutions.
The obvious one: ads! yeah I know we said never never never but we had our fingers crossed.
But that just gives us one bullet point on the powerpoint! We have to have at least two. What else can we pull outta our ass in a hurry?
After brainstorming ideas (rebrand as Dizzney+, hold a bake sale) they came up with the best of all the bad options for bullet point #2: crack down on password sharing. Yeah yeah we said we didn’t care, but see comment about ads.
And the stock price crashed 70% anyway. But now they have to go thru with this nonsense.
Re: Netflix retarded management
They better get busy fixing this or they will not have anything left to save. The competition will eat their lunch.
Netflix Sign on system
The Netflix sign on system is a total mess. I just cancelled my subscription because I cannot watch Netflix no matter how hard I try. The sign on system appears to have been designed by ultra-retarded frogs. They better get real busy fixing it or they will lose scads of business. Whoever is in charge of this system should be fired and hire someone who knows what they are doing.