Worried About Backlash, Netflix Delays Password Sharing Crackdown In U.S.
from the charge-you-more-money-for-a-worse-product dept
We’ve noted more than a few times that Netflix’s password sharing crackdown is a dumb cash grab, and illustrative of the company’s inevitable transition from innovative disruptor to the type of nickel-and-diming cable company Netflix originally disrupted.
Netflix’s biggest innovation in the last five years is this new plan to sock you with a $2-3 extra surcharge if they determine you’re sharing your password with someone outside of your home.
Netflix originally tried to use developing nations as guinea pigs for its new plan. It didn’t go well. In many of these countries, users found the restrictions cost restrictive, poorly managed, and confusing. In Spain, the move recently resulted in the company losing more than a million subscribers. This apparently shocked company executives, who now say they’re delaying implementation of the plan in the U.S.:
The company said it delayed its password-sharing crackdown to give it time to learn which approach was best for members and its business. As a result, the revenue from the change is now expected to come in toward the second half of the year, according to the people familiar with the matter.
The best approach is to back off the plan entirely. There’s evidence that the company’s projections for how much money it can make off of annoying its customers aren’t based in reality, and that the defections could be higher than company projections. All to implement a fix to a problem that isn’t technically a real problem in the first place.
Netflix spent years encouraging password sharing as no big deal. Netflix also already consistently raises rates on its users. And the company already monetizes the thing it’s suddenly insisting is a huge problem by limiting the number of simultaneous streams per account (and nudging users to more expensive tiers if they want to stream numerous shows concurrently via the same account).
Netflix is correct to worry that imposing annoying new restrictions and surcharges could cause a notable exodus in a streaming market that’s increasingly competitive. But I’d wager the pressure to deliver improved quarterly returns to Wall Street at any cost (even if that means angering loyal users or tarnishing the brand longer term) will once again dictate all future momentum.
Filed Under: cable tv, disruption, password sharing, passwords, streaming, video
Companies: netflix
Comments on “Worried About Backlash, Netflix Delays Password Sharing Crackdown In U.S.”
Years ago on Techdirt people were complaining about how new shows weren’t on Netflix. They basically wanted everything to be on Netflix, and for there to be no other streaming services. I wonder how those people feel now.
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As if the two are related
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You seem to be reading another site and confusing with TD.
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By all means, link to those comments/articles as proof. I’ll wait.
Re: Re: we wanted a la carte!
Yeah I’ve been constantly befuddled by what people want from streaming. People say they want a la carte but we’ve had that for years, most stuff can be purchased direct from Amazon, Google, iTunes etc not too long after it’s created. More expensive that way, but that’s inherent in the a la carte model. You get exactly what you want but you don’t get a bundled price discount.
The notion that there could ever be “one” streaming platform is silly. If there was one, they’d jack up the prices to the moon, which would open an opportunity for competitors to start making more content for a new service and we’re right back where we started.
The equilibrium point for major paid services is 4-5, I’d guess. Amazon, Apple, Netflix, Disney, Max. The rest will get absorbed, probably by Amazon. We might as well stick with those vs Platform A, B, C, D and E, which would come into being if those went away.
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What I think most people would like is the idea of streaming platforms sharing legacy/non-original content. Put Friends on every service and let people choose which one they like more based on UI/useability and original content. Think of it like shows airing in syndication on basic cable: Maybe you like watching an old favorite on Channel X, even though it also airs on Channel Y or Channel Z, for whatever arbitrary reason—but that doesn’t mean X should be the only channel that gets to air it.
The streaming market is not really competitive. It’s just choosing one service’s catalog over another.
But no-one here seems to be ready to have that conversation.
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“The streaming market is not really competitive. It’s just choosing one service’s catalog over another.”
“But no-one here seems to be ready to have that conversation.”
I do not care about streaming services, is that a problem? Why should I care? What content are they streaming that is a must see and available no where else?
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Oh but the conversation is pretty much happening. The problem here is copyright.
Re: they make the catalog in order to be competitive.
The shape of the streaming market is created by consumer demand. What do people want, how much of it, how much will they pay, how much will they churn.
That demand seems to have coalesced into a stable form now. What people want is: the big hot show or movie of the week, often based on big IP. As each service gets more content, the number of services needed at one time declines, so churn increases. What they will pay varies hugely across the world. In North America, Netflix makes $15/month on average but in Asia it’s half that.
So everyone gets a “say” but everyone’s voice is not equal. The streaming audience doesn’t seem to be growing massively anymore like in the past but there’s more growth outside N America (and Latin America, which grew early on).
And then there’s FAST (free, ad-supported) which is increasing in popularity and putting more stress on the rest of the field by stealing audience.
And then there’s the existence of tech behemoths: Amazon, Apple, Google (with YouTube Live) which have an “unfair” advantage of being insulated vs Netflix, Disney etc that are under pressure to actually make a profit from streaming.
And there’s the continuing existence of YouTube and social media, which inhibit the size of the streaming audience simply by offering free entertainment of a different sort.
Add up all these factors and you get maybe 5 major paid services, two of which will be tech behemoths (YouTube Live doesn’t have the global reach to be a factor, at least not yet) and three others that are Netflix with its first mover advantage and two others with the best IP: Disney and Max. Hulu will be absorbed by Disney; Paramount will eventually get absorbed, maybe by Amazon or even Walmart; and Peacock will devolve into a FAST service.
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We’ve been having that conversation for years.
What do you want to add to it? Or was that all you’ve got?
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Yeah that was mainly meant for the article writers as so many think that what’s actually happening with streaming (content being moved behind multiple different streaming service paywalls) is competition for Netflix. That said, there are a few commenters who think the same way.
I still think market segmentation is the biggest problem streaming faces, i never wanted only netflix. I wanted competition to prevent price gouging and see invocation in pricing and format.
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…wait, so, are you for segmentation or against it?
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i’d say he wanted multiple services carrying the same content and competing on price and stuff.
Maybe i’m crazy tho’.
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That’s exactly how I read it and it’s a breath of fresh air that some commenters here besides me are willing to talk about that elephant in the room (especially when it comes to the major studios).
Screens
If I were to change how the service is marketed, it wouldn’t be about locations. The only thing that matters is how many simultaneous screens being viewed. That controls how much bandwidth the company is using and how much in residuals they have to pay, if any.
Change the screen amount offerings. It will get them closer to where they want to be and not upset their customers.
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But we can make more this way!!!
People who are sharing accounts will totally become paying customers at the same tier they were sharing before and we’ll have double the income!!!
Cocaine… its a hell of a drug.
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Not when all the people who’ve ever watched one screen since always, and don’t watch more than a few hours a week, decide they should be paying less. i.e., going with the current rate as the one-screen price will really piss people off.
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They already have this, but are getting greedy. I paid for the premium 4K service not for the higher quality, but for the additional streams. I did this specifically to share the account with my wife and other immediate family members who lived outside my main home.
When all this started happening I dropped it to the Standard plan. Seems my family is watching less Netflix anyway since I don’t get any warnings about too many streams.
“every pirate wants to be an admiral”
They had to expect to lose some subscribers over this, but would’ve been hoping to gain more. The “shock” makes me think the net change was negative. Did they actually provide a number, though?
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I doubt they would’ve been shocked if the loss/gain ratio favored “gain”.
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They probably expected it to slightly favor “loss”, but come out about even, financially, due to decreased network and licensing costs corresponding to the lost subscribers (and increased licensing income if Netflix-owned shows are licensed to competitors). But is it like a million subscriptions canceled, and 500,000 new subscribers who used to leech off family? Or more like a few few thousand new subscribers, and the rest of the cancelers said “fuck it”?
People are being very vocal against this bullshit on various social media sites since talks about charging extra started circulating. They ignored it and went ahead and then made the “shocked pikachu” face when things went to hell.
Well duh.
The backlash is going to be even worse here in Brazil. Every single person from my social circles say they are considering cancelling Netflix because it’s already too expansive if compared to the competition (if I sum the values of Disney/Star, HBO and Amazon it’s still cheaper than Netflix and the only downside is I have just 3 screens on those). Adding another fee on top of an already expensive service with a culture of password sharing wide3spread is going to be a nuke in the feet, not a shot.
Yeah…as soon as I heard the restrictions hit Spain, I did cancel my subscription. I’m not waiting for that BS especially with the crap shows they’ve been putting out.
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Do I really need Netflix anymore?
I think most people still keep Netflix on sheer inertia. There’s not much good stuff on there anymore but most people just keep it subscribed in case something good does come.
What will happen if Netflix cracks down on password sharing in the US is that people will reevaluate their need for the service and will probably cancel. Netflix got a taste of this with their overseas experiment with this and backed off the idea. There’s too much competition and Netflix’s rates are starting to climb to the point of being too expensive.
Re: I'm dropping Netflix
I’m cancelling but not because of password sharing. it’s because the quality has dropped so badly that I can’t find much to watch anymore. It’s going on churn rotation with all the others.
why Netflix needs to be cautious
Netflix gets a lot of benefit from investors who see the weekly Nielsens list dominated by Netflix titles (mostly garbage, but that’s inevitable given their downward slide). If they boot a lot of password sharers, they may make a bit of money from new subscribers but I bet the artificial dominance of that list will evaporate and that’s going to hit their share price some. They already make a profit but their share price got walloped over a year ago and has never recovered.
Actually, that’s spelled ‘imagine’.
i keep waiting for all these streaming services to start making it really difficult to drop and restart subscription. (i mean, that’s antithetical to the subscription model already, never minding the contemporary bastardization of it.)