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Netflix tests another way to charge for password sharing

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Netflix Inc. will ask customers in five Latin American countries to pay a fee if they want to use their account in an additional home, a test the company hopes will generate additional revenue by getting customers to pay to share their Netflix account.

Netflix believes that password sharing is one of the core reasons for its flagging user growth.

Customers in Argentina, El Salvador, Guatemala, Honduras, and the Dominican Republic will be asked to pay an extra fee if they use an account for more than two weeks outside of their primary residence, the company said Monday. This won’t affect the use of Netflix on mobile devices such as smartphones, tablets, or laptops, nor will it affect people on vacation. The additional home will cost 219 pesos ($1.70) in Argentina and $2.99 in the other countries.

Frankly, we’ve been working on this for about almost two years … a little over a year ago, we started doing some light test launches that … informed our thinking and helped us build the mechanisms that we’re deploying now,” Netflix’s chief product officer Greg Peters explained on the earnings call. “We just did the first big country tests, but it will take a while to work this out and to get that balance right.”

More than 100 million households are reportedly using the service for free.

Currently, Netflix’s Standard and Premium subscribers in its handful of test markets are being offered the option to add “sub-accounts” to their service for people they don’t live with. Each sub-account will have its own profile and personalized recommendations — but they also have their own Netflix login and password.
Netflix will now start charging a fee when you share your account with other users.
This sets them up to become established members with their own accounts in the future. If they choose to make that move, their viewing history, watch list (“My List”), and personalized recommendations will transfer over to their own account with their own billing information. (And since the member sharing their account now has to pay more, they may choose to push the freeloader off their account when the new charges kick in.)
The main reason Netflix made these changes is how it impacted the company financially. By not allowing people to share an account, they don’t have as much risk of customers abusing the system. They also expect that changing the way they handle accounts, will encourage people to actually purchase their own. If a person has their own account, then it eliminates the worry about running out of movies, or if someone is using all of their viewing time.

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