How Charging for Account Sharing Will Affect Netflix?

Last week Netflix announced a couple of new features that are, to say the least, undesirable for users. It turns out that the largest streaming company will start charging $2.99 to people who share their accounts with people who live "outside their home."

The company made it very clear that the reason for this decision is money. Accounts are shared across households, which affects our ability to invest in new TV shows and movies for our members.

Although for now Netflix is only going to implement these changes in Chile, Costa Rica and Peru. If they were to implement them globally, these could be some of the possible consequences of this.

Will there be an exodus of users?

A study of S&P global market intelligence estimated that 10% of Netflix users in the United States share an account, simply because they feel they don't use the platform enough to pay for a full subscription. What remains to be seen is whether this price increase could be enough to drive users who do pay for these accounts off the platform.

Right now, the platform costs $10 a month on its most basic plan and has been forced to raise prices every year (in 2021 it was $8.99) due to the large amount of money it spends on its own productions and the increase in competence.

One would think then that the increase in payment for sharing accounts would drive several users away from the platform. Ironically, however, the opposite could happen. With this additional revenue from users sharing their accounts, Netflix could lower the price of the base subscription, leading to more people signing up for its service. By lowering its subscription price, it could also capture the audience of other streaming services.

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A strong reputational blow

Upload or downgrade your users, this will undoubtedly result in a reputational blow to Netflix. The platform has always been sold as an alternative to traditional television and adding more payments per household definitely does not help this image. At a time like this, when streaming options abound, starting to charge for shared accounts will leave many users with a bad taste in their mouths.

Internal platform changes

With these new revenues, some of the series that have been abandoned by the platform could be retaken, something that happens frequently. We could also see a lot more original content.

On the other hand, we could be sure that the lack of ads, another of the key characteristics that defines Netflix as a platform, is not going to be implemented. It would be asking too much for users to pay for shared accounts and also have to watch ads to access their favorite content. We could also see a reduction in the "product placement" that it gives in some original series on the platform.