Netflix’s Dumb Password Sharing Crackdown Will Cost You $8 Per Moocher

Overhype

from the big-fat-cash-grab 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.

We’ve also noted how the company was forced to delay the effort a few times, after backlash in countries like Spain resulted in it losing a million subscribers — far greater than executives expected.

Undaunted, Netflix this week started turning up the heat on users in preparation of the crackdown, penning a blog post that notes that once active, users will have to pay an extra $8 per person currently sharing your password. Netflix remains a little vague about how they’ll single out these dastardly culprits:

We use information such as IP addresses, device IDs, and account activity to determine whether a device signed into your account is part of your Netflix Household. 

We do not collect GPS data to try to determine the precise physical location of your devices.

Contrary to many press outlets, Netflix isn’t enforcing this yet. They’re simply dipping a toe in the water and getting users used to the idea. I’d expect that if backlash is excessive, it’s still entirely possible they back off the idea.

As we’ve noted previously, this genuinely is Netflix being greedy. The company, for years, actively encouraged password sharing, insisting it was no big deal. It also already monetizes extra users per account by limiting the total number of simultaneous streams per login. Want more streams, you already need to upgrade to a more expensive plan.

Then there’s just the risk that Netflix will annoy cost-conscious customers at a time when streaming competition is soaring, imposing cumbersome new limits on the heels of already unpopular flat rate price hikes.

We’ve also noted how the folks advising on how much money they’ll potentially make on this crackdown aren’t really based in reality. The kind of folks that share Netflix password (students, that friend who only watches TV occasionally) aren’t likely to sign up for their own accounts. Younger Americans are increasingly preferring YouTube and TikTok.

This is all assuming that Netflix pulls this off without screwing things up. That hasn’t been the case in the countries Netflix used as guinea pigs to test tech and messaging.

To be clear I don’t think the move will be particularly fatal. A lot of folks still see significant value in the Netflix cost equation, especially when compared to cable TV. But I do think it’s another link in a chain of evidence (like when Netflix gave up on supporting net neutrality when it became wealthy and big enough that it not longer worried them) showcasing that this company is running out of ideas.

Much like it did when Netflix disrupted Comcast, Netflix’s decision to nickel-and-dime its users with punitive, confusing restrictions and fees opens the door for other, more flexible companies to gain inroads simply by being less annoying.

Filed Under: cable tv, competition, media, password sharing, password sharing crackdown, streaming, video
Companies: netflix

Netflix’s Unnecessary Password Crackdown Is Already A Hot Mess

Failures

from the annoyance-as-a-business-model dept

Netflix’s password sharing crackdown hasn’t even launched yet in the States, but is already a public relations mess.

The plan is to try to force Netflix customers to pay an extra $2-$3 every month for service for any users using your credentials outside of the home. An accidentally leaked Netflix help guide last week indicated that users who don’t log into their Netflix account in a 31 day period would face the new surcharges, something that didn’t go over well with either users or celebrities that travel a lot.

The company was then forced to backtrack, stating the guides were posted in error, and intended for customers in countries like Chile and Peru where the crackdown had already launched. Those efforts, as we’d mentioned previously, were also reportedly a confusing mess for subscribers in those countries, who say it was never really clear how the inconsistently-enforced system actually worked.

Netflix is embracing the move because the company’s growth has hit a wall internationally, forcing it to begin nickel-and-diming existing subscribers if Wall Street is to get its improved quarterly returns.

The problem: Netflix has already raised rates recently, and already charges users more money if they want to be able to play multiple streams simultaneously, meaning they’re effectively double dipping after more than a decade of informing customers that they fully supported password sharing.

Netflix is convinced that the move will net them millions in additional revenue, but as we’ve also previously noted, projected revenues from the crackdown don’t appear well-rooted in reality. Some analysts have been highly skeptical that Netflix’s password crackdown pays significant dividends at all:

Benchmark Co. analyst Matthew Harrigan, in a note last week, expressed skepticism that it would be a “growth game-changer,” opining that the strategy “cannibalizes full-ride member growth.” He pegged the incremental revenue lift at less than 4% revenue, even with generous assumptions about how many piggybackers Netflix might be able to convert to Extra Member accounts.

The question then is: is that modest bump in revenue worth alienating and annoying your existing customers in a competitive streaming market? We’re apparently going to find out.

To be clear, I still think Netflix has value at its current monthly rate, and many people who complain about the new rate hikes are lazy and likely won’t cancel. On the flip side, this move remains the latest signal from the company that it’s done with being innovative and disruptive and has, as publicly traded companies usually do, shifted toward nickel-and-diming and turf protection as it attempts to fend off competitors.

But angering your customers, and making them more likely to shift to competitors that don’t try and nickel-and-dime users, isn’t a particularly brilliant business plan any way you slice it. And if the rollout is as sloppy as it was in Chile and Peru, this won’t be the last screw up users experience.

Filed Under: cable tv, competition, netflix, password sharing, password sharing crackdown, streaming, tv, video
Companies: netflix