Since Netflix announced it had lost a total of 200,000 subscribers during the first quarter of the year, both the world’s largest streaming service and the industry as a whole have been trying to understand what the future holds and how to adapt to the new. streaming reality.
Apparently in response to its first drop in subscribers in over a decade, Netflix has announced two changes to how it will work in the future. First, the company plans to roll out an ad-supported subscription option later this year, and second, the streamer plans to expand its efforts to curb password sharing.
After launching the initiative in Latin America earlier this year, the results have so far not been encouraging for the streaming giant, but a new study by Variety Intelligence Platform and CRG Global suggests that Netflix users currently using someone else’s account can be persuaded to sign up for their own profiles.
Sure, the study only spoke to 504 US Netflix users, only 143 of whom are using someone else’s paid account, so the numbers aren’t scientifically valid, but the results should still be encouraging for Netflix.
Conducted late last month, the survey found that nearly two-thirds (64%) of participants currently using someone else’s Netflix account would be willing to pay on their own “if they were forced to.” Likewise, 71% of people who allow others to use their password would be willing to pay extra to continue the practice.
While Netflix obviously wouldn’t be against the former option, the latter is more in line with how the platform plans to implement the efforts. After their April earnings report, Netflix executives explained that they would be focusing on inviting subscribers to add sub-accounts to their existing plans to share their password on the go.
While this plan will not technically increase the streamer’s subscriber base, it is designed to increase revenue per subscriber, which has been where investors and Wall Street have hoped the industry would turn its attention following the rising budget. free for all the past several years.
Netflix reported earlier this spring that 100 million people, or 45% of its base, are using its service via someone else’s login credentials. So, converting them into paid subscribers, in one form or another, presents a potentially substantial revenue increase for the service as it continues to see its share price drop.
With 30 million US and Canadian households accessing Netflix without paying for it, there is absolutely an opportunity for the streamer to increase revenue, but the question is how much? According to the VIP + study, of 64% of users willing to pay for their accounts, there is quite a sizable spread regarding the age demos these potential customers fall into.
Users between the ages of 25 and 44, who are mostly in the Millennial age group, were the least willing to pay for a plan. This isn’t necessarily a surprise as these generations have grown up or come of age during the rapid expansion of the internet and, in turn, streaming, so they are likely more open to adapting to new services and technology options.
The somewhat surprising thing is that the older generation – 45 years and older – were the most likely to pay for their plan if needed. While this may be explained by some sort of sense of right and wrong, these age groups are made up of TV consumers who grew up in the era of standards, broadcast TV, and (for younger people) the rise of basic cable. It could be assumed that these users would be more comfortable ditching Netflix for a more traditional viewing experience, especially if they only had Netflix because their kids installed it on their TVs for them.
Interestingly, Gen Z – ages 18 to 24 – are just a couple of percentage points behind their older counterparts in being willing to pay for their own plans.
With monthly rates ranging from $ 9.99 to $ 19.99, Netflix is already the most expensive premium platform in the US market, so introducing the cheapest, ad-supported tier is likely to be a way to introduce new platforms. more cost-conscious customers – or to keep those who might otherwise unsubscribe.
Half of the VIP + respondents said having a lower level continuing ad-free experience would encourage them to sign up for their account. And while it might seem like an unlikely option for Netflix given this year’s price hikes, it’s essentially the streamer’s “sub-account” plan. The idea would be to charge the original account holder a small fee – perhaps $ 2- $ 4 per month – and then they could create accounts away from home for other people to use.
But cost isn’t the only thing that would encourage users to pay for their subscriptions. While Netflix continues to maintain what the studies say is the “best streaming library,” studio VIP + and CRG Global have shown that this specific group of users would like to see more non-Netflix Original movies and TV shows on the service.
Netflix has built its huge subscriber base by being the home of streaming almost all TV and movie content. However, as more companies and studios launched their competing services, Netflix lost a substantial portion of its licensed inventory. The company responded by pouring billions of dollars into original programming, but Netflix’s success rate on those projects has so far been unpredictable, and viewers have long been concerned that the service cancels niche series too quickly.
Despite the optimism provided by the Variety study, another recent survey by media research firm Aluma indicated that Netflix could see 13% of its US customers cancel their accounts due to cracking down on password sharing; a far less rosy prospect.
At this point, no one can guess how consumers will respond to password sharing changes, and until Netflix goes public with all the details of its plans, it’s hard to truly gauge what the future holds. But, assuming the service continues with attempts to convert freeloaders into additional revenue, it will be a big change for the service and a major test case for the rest of the industry.