Netflix wants to limit the number of users who can watch its content for free

Faced with a drop in its subscriber base for the first time in 10 years, Netflix faces stagnation after a decade of growth. In the first quarter of 2022, the streaming platform lost 200,000 of its 221 million subscribers. From afar, this loss might seem like a drop in the bucket for the California giant. But this shortness of breath worries investors. “Management has made it pretty clear that we can only expect very weak growth in 2022 and 2023”Bank of America analysts said in a note.

In order not to lose money despite this slight drop in subscribers, Netflix wants to use shared identifiers to target viewers who watch its content without payment. According to estimates by the American company, around 100 million people access the platform without paying anything. With a subscription to Netflix, a customer can actually watch the videos on two, three, or four different screens depending on the subscribed option. This often prompts users from different households to share a subscription. What, however, prohibits Netflix’s usage charter, which only allows screen sharing within the same household.

“When we grew rapidly, that wasn’t a priority. And now we’re working hard on it.acknowledged co-founder Reed Hastings when presenting the results for the first quarter of 2022. “We don’t want to stop this sharing”warned Gregory Peters, operations manager, however “Convert Better” this improper insight into revenue.

“We have a friend who subscribes to all platforms and gave us his accounts”

Gaël, resident of Lyon and “secret” user of Netflix

Since the advent of streaming platforms (Netflix, Dinsey+, Prime Video, MyCanal, etc.) sharing identifiers has become a very popular practice. But are “clandestine” users ready to come to the wallet in case of a restriction on the sharing of access codes?

“We have a friend who subscribes to all platforms and gave us his accounts. If he ends his subscriptions, I think my girlfriend will want to keep Netflix. I dont know. It’s either just Netflix or nothing”explains Gaël, manager of a humanitarian association in Lyon.

“We see MyCanal thanks to my parents’ codes. But if they stopped subscribing, we wouldn’t continue. We wouldn’t subscribe to any platform because of the prices and the fact that we can watch shows on ‘pirate’ sites. I don’t have too many qualms about watching big shows.”says Antoine, a young thirty-year-old employee in an urban development company.

Airing on Netflix, the documentary series

Users who use account sharing without paying, Netflix must manage to change their minds without rushing them too much to prevent them from turning to other platforms or illegal streaming sites. “This is an issue that goes beyond Netflix and affects all video-on-demand (VoD) platforms. In the first quarter of 2022, Warner also faced such issues with its platform.”says Louis Wiart, Professor at the Université Libre de Bruxelles and specialist in streaming platforms.

According to this researcher, Netflix has also developed thanks to account sharing, which has allowed the American giant to make itself known to a large audience very quickly. “This practice of screen-sharing between people from multiple different households was tolerated by Netflix and played a role in the development of the platform by encouraging consumption of its content.”

The return to this function could be misunderstood by the public. “There is a risk of damaging brand image if Netflix stigmatizes the way its customers use its services. Again, this is a very common practice. The second risk is increased piracy. With the 100 million people who You can imagine consuming without payment.” some will not want to pay for Netflix”continues Louis Wiart.

Netflix headquarters in Los Gatos, California.  (JUSTIN SULLIVAN / AFP)

To find out what the public is willing to accept in terms of identifier sharing, Netflix launched a series of comprehensive tests. In South America, the VoD leader will conduct an experiment in three countries: Costa Rica, Peru and Chile. Subscribers must pay a fee (approximately $3 in Chile, $2.99 ​​in Costa Rica, and $2.12 in Peru) on top of their monthly subscription to add up to two additional accounts to their profile.

“We’ve always made it easy for people who live together to share their Netflix accounts, with features like separate profiles and simultaneous streams for our Standard and Premium subscriptions. While these features are hugely popular, they’ve also created a form of confusion about when and how Netflix might be shared.”said Chengyi Long, director of product innovation at Netflix, in a statement on March 16.

A second option is being tested: “stealthy” users using a subscriber’s codes can switch their profile (which records their likes, recent views, etc.) to a new account. “The goal is to encourage people who benefit from account sharing to subscribe themselves while keeping their story.”notes researcher Louis Wiart.

“They want to check if we live in the same household, but we never got anything”

Quentin, 29, residing in Rennes

In 2018, it was Spotify, the music streaming leader, that tried to curb over-sharing on its “Family” service, which allows access to the platform from multiple screens. “They had changed the Family Account Terms of Service by tightening user address controls to limit usage to people from the same household. Spotify had initially attempted to control users’ whereabouts thanks to geolocation. But faced with anger users, traced them. They have since verified the address by sending identity verification requests to subscribers,” notes Louis Wiart

This increased control of Spotify is not very effective according to users. “My parents have a Spotify family account and I use it without living with them. They want to check if we live in the same household but we never got anything. It looks more like an announcement effect.”, Quentin admits. He lives in Rennes, a few dozen kilometers from his parents.

A promotional poster for the French series Lupine (broadcast on Netflix) in Kraków, Poland, June 13, 2021. (BEATA ZAWRZEL / AFP)

The risk for Netflix with this policy of restricting access to its platform is losing subscribers without gaining new ones. On social networks, many Internet users are waiting for the release of exclusive and high-quality series and films on Netflix, which in recent months has faced increasing competition from Prime Video and Disney + with an offer of major productions.

The problem, however, is that Netflix’s production costs are exponential: they jumped from €1 billion in 2010 to €20 billion in 2020. “The real question is: does Netflix produce content that satisfies its audience? On social media, fans point out the poor production or productions that are below expectations.”emphasizes Louis Wiart.

“With the competition, you need a lot of content to attract viewers. If Netflix continues to have more subscribers than others and it’s easy to unsubscribe, that’s because it’s still perceived as the best value for money.”shade Julien Pilott, Associate researcher at the CNRS and specialist in the digital industry.

On Friday May 13, Netflix announced the end of the French series FunCritically acclaimed, hence there will be no second season. When asked about the reason for the non-renewal, Netflix mentioned the need for a fair relationship between them “Audience and Production Costs”. A settlement that the viewers may not hear with the same ear.

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