The implementation of Netflix password sharing fees last May has paid off for the streaming giant in a big way with major increases in both subscriptions and revenues in its most recent quarter.
The company added 13.1 million subscribers during the fourth quarter — up from 7.7 million in the same year-ago period — largely on the back of its efforts to “monetize sharing.” In addition, Netflix earnings for the quarter soared 12.5% to $8.8 billion.
“Our healthy top-line growth reflects the benefits of paid sharing, our recent price changes and the strength of our underlying business driven by a strong slate,” the company said in its January 23 earnings announcement.
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But the company also signaled that another round of price increases is on the way and said that it plans to phase out its Basic plan for new and rejoining subscribers.
“As we invest in and improve Netflix, we’ll occasionally ask our members to pay a little extra to reflect these improvements, which in turn helps drive the positive flywheel of additional investment to further improve and grow our service,” it said.
Last October, Netflix hiked prices for the second time in less than two years. The current monthly pricing for the Netflix Standard plan with ads is $6.99. Without ads, the Standard plan will run you $15.49 a month and the Premium plan will cost $22.99.
Netflix password sharing changes
In the January announcement, Netflix also said that it believes it has successfully addressed account sharing, which has created a bigger subscriber base and ensured “that when people enjoy Netflix they pay for the service too.”
Last May, Netflix officially announced its plan to reduce unauthorized password sharing in the United States among customers who share logins with friends and family outside their household. Netflix announced on its corporate blog that “Your Netflix account is for you and the people you live with — your household.”
The company is cracking down on customers who share their accounts with people outside a single geographic household, introducing an $8 monthly charge in a long-threatened bid to retain customers and stanch a slowdown in subscription growth. Netflix uses location tracking to ensure subscribed users are logged in at a single home subscriber base, which is sure to test users already sensitive to growing threats to their online privacy.
Current customers can buy an extra membership to their main subscription for an additional $7.99 per month.
Since the end of June, Netflix has blocked devices that attempt to access a Netflix account without paying the proper fees, according to TechRadar. Subscribers in a compliant household can keep using the service on the road, like on laptops or hotel TVs, without paying additional fees.
Netflix warned ISP partners of backlash
The Financial Times previously reported that Netflix had alerted internet provider partners in the UK that they should expect angry calls and support questions about the sharing price hike and location tracking features.
This move suggested that despite Netflix's best efforts, the company predicted a large number of subscribers would only detect the change when Netflix demanded an extra $8 for sharing the account outside their new "home" location.
Time to shop around?
Netflix customers have a few options at hand for dealing with this new account sharing reality. They can pay the extra member fee for $7.99 or get a new account for as little as $6.99.
Or they can shop around to see what streaming competitors are offering. We've broken down the latest deals below:
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