For anyone who follows the money in the Stock Market, there was an interesting story during the week that focussed on NEFTFLIX Subscriber Base falling in the first quarter of 2022.

The value of Netflix is falling as the company contends with subscribers leaving the streaming giant in droves.

In less than four months, the company’s share price has dropped two-thirds, from its peak at the end of 2021. It suffered a plunge of 35.1 per cent on Wednesday alone, its largest one-day fall in more than a decade.

With tough times seemingly ahead, Netflix has flagged possible changes to its product.

These changes could have a massive impact on customers, especially those who love the product the way it is especially when it comes to “Password Sharing”.

Let me be clear here. Password Sharing is not a “feature” of NETFLIX, nor is it permitted within the licensing and terms and conditions of a contract.

However, many out there have been “kind” enough to share the love and provide your login details to family and friends so that they could watch Bridgerton or Squid Game.

This “kindness” was tolerated to a large degree by the bean counters at NETFLIX especially during the rapid increase in Subscribers and revenues seen in recent times through COVID but like all good things, the reality is that this tolerance has a finite limit and that limit is being tested as we speak

To be fair, the entire concept of Password Sharing is not confined to NETFLIX, with all of the major streaming Platforms being exposed to the same challenges but given the NETFLIX dominance in the SVOD space, it is front and centre of the discourse.

The ABC covered this story below and it covers what impacts the changes could have for you and those you “share” with.

Account sharing crackdown is on its way

The art of sharing passwords for streaming services has been enjoyed for years.

Netflix has allowed accounts to have multiple profiles but has not put an end to different households using the same account.

It estimates there are around 100 million households globally that watch Netflix but do not pay for it.

This appears to be over, with the streaming giant currently trialling a new payment system where those who have accounts used across multiple households will pay more.

That trial is being conducted in Chile, Costa Rica and Peru.

Members of a standard or premium account will be allowed to add sub-accounts for up to two people who live in separate households.

This will cost roughly an extra $US3 ($4) per month.

Netflix said the act of different households sharing the same account with no additional fee was hampering their business.

“While [separate profiles and multiple streams] have been hugely popular, they have also created some confusion about when and how Netflix can be shared,” Chengyi Long, director of product innovation said in March.

“As a result, accounts are being shared between households — impacting our ability to invest in great new TV and films for our members.”

Netflix has not announced any time frame for when these changes could be rolled out across the globe, meaning household account sharing is safe in Australia for now.

Cheaper subscription could come with advertisements

A major drawcard for Netflix since it became a steaming service was its lack of advertising.

However, this looks like it could change in the near future.

Chief executive Reed Hastings told investors during a conference call on Tuesday that the company had been considering introducing a plan where customers could pay less, but have advertisements.

“Those who have followed Netflix know that I have been against the complexity of advertising, and a big fan of the simplicity of subscription,” he said.

“But, as much as I am a fan of that, I am a bigger fan of consumer choice. And allowing consumers who would like to have a lower price, and are advertising-tolerant, get what they want, makes a lot of sense.”

Mr Reed told investors that this option could become a reality within the next two years.

When asked if Netflix would consider trialling ads in some markets before rolling it out globally, Mr Reed said there was effectively no need for that.

“I think it’s pretty clear that it’s working for Hulu. Disney is doing it. HBO did it,” he said.

“I don’t think we have a lot of doubt that it works, that all those companies have figured it out.”

Has Netflix said when consumers would see ads?

Not yet. It has kept its cards close to its chest about how a plan with advertising would look for its customers.

However, it could follow a similar plan to some of its competitors, such as HBO, Disney and Hulu, which were all mentioned during Tuesday’s investor meeting.

Customers of HBO Max will see ads at various points while on the streaming service.

“You’ll see ads before and during select shows and movies,” its website states.

Hulu also shows advertisements in the middle of programs.

Wait, why is this happening?

Netflix has seen its value fall dramatically over the past few months.

The investor pull-out comes off the back of Netflix announcing 200,000 subscribers had left their service in the first quarter of 2022.

It will get worse for Netflix, with an estimated loss of 2 million subscribers from April to June.

The removal of Netflix in Russia in response to the war in Ukraine was given as a reason for the exodus.

Netflix’s value sits at around $US100 billion, well down from its height of around $US300 billion in 2021.

It is also suffering from a saturated, competitive market.

 

Patrick Larobina