Additional Fees for Account Sharing Introduced First in 3 Latin American Countries
4-Person Group Cheaper Than 'Ad-Supported Basic'... Sharing Must Be Blocked for New Plan Success
[Asia Economy Reporter Oh Su-yeon] Netflix, the world's largest global online video service (OTT), has introduced a 'Profile Transfer' feature. Industry insiders view this move as an effort to curb account sharing to enhance profitability, following Netflix's announcement on the 14th that it will introduce an ad-supported plan starting next month.
On the 18th, Netflix announced the launch of the 'Profile Transfer' feature. Netflix explained this feature as "allowing people who share an account to transfer their profiles when starting their own new membership." It added, "By using the 'Profile Transfer' feature, personalized recommended content, viewing history, my list, saved games, and other settings can be maintained exactly as they are in the new membership."
This feature was first introduced in March in three Latin American countries?Chile, Peru, and Costa Rica?where additional fees of $2.11 to $2.97 (approximately 3,007 to 4,232 KRW) were charged to account sharers.
IT media outlet The Verge stated, "Profile Transfer has been tested since March in Chile, Costa Rica, and Peru. Now it is being rolled out more broadly," and described it as "one of Netflix's many moves to find ways to earn more money from people who share account passwords." It also noted, "As Netflix explores more ways to increase subscribers, cracking down on password sharing has become one of the company's main guidelines."
In April, Netflix revealed in a shareholder letter that while it had tolerated account sharing during subscriber growth periods, it plans to charge account sharers as subscriber numbers decline. Although specific methods and timing have not been disclosed, Netflix said it may introduce additional fees as early as next year. With Netflix's introduction of the ad-supported 'Basic with Ads' plan on the 14th, industry experts see the prohibition of Netflix account sharing as a matter of time in the OTT sector.
An OTT industry insider said, "There is no reason to subscribe to the ad-supported plan when a four-person shared account is available at a lower cost," adding, "To increase subscribers for ad revenue, account sharing will be banned."
Based on South Korea's pricing, if four people share the Premium plan (17,000 KRW), which allows up to four simultaneous streams, each person only pays 4,250 KRW. This is 1,250 KRW cheaper than the ad-supported Basic plan priced at 5,500 KRW. Beyond friends splitting the cost, sharing accounts through sharing platforms or secondhand trading platforms has long become a trend.
In the United States, the Premium plan costs $19.99, and if shared by four people, it is $1.99 (approximately 2,832 KRW) cheaper than the $6.99 ad-supported Basic plan.
Moreover, the ad-supported Basic plan requires watching 4 to 5 minutes of ads per hour, and the content quality is HD, lower than the UHD quality of the Premium plan. There is no reason to pay more to subscribe to the ad-supported Basic plan. Ultimately, even if the ad-supported Basic plan is fully launched next month, it will be difficult to expand ad revenue if account sharing does not disappear.
As platform users increase, the power as an advertising platform grows proportionally, making it essential to block account sharing for the success of the ad-supported plan. With the OTT market saturated, Netflix has seen subscriber declines for two consecutive quarters, recording 220.7 million subscribers as of the second quarter. Netflix revealed that about 100 million users worldwide are estimated to share accounts, accounting for half of all subscribers.
According to the '2022 First Half Mobile Communication Planning Survey Report' released last month by Consumer Insight, 40% of domestic OTT users share accounts with others. Especially among Netflix users, 60% share their accounts.
Domestic OTT services prohibit account sharing with non-family members in their terms of service but have not actively enforced this yet. Since the service is in its early stages and expanding customer touchpoints is important, and various partnership plans allow affordable use, account sharing is not as active as with Netflix. There are also concerns that if Netflix cracks down on account sharing prematurely, it could provoke customer backlash.
According to Consumer Insight's survey, 89% of Coupang Play users, 74% of Wavve users, and 73% of TVING users pay the full subscription fee themselves.
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