KISDI 'Analysis of Paid OTT Service Usage Behavior'
Netflix Introducing Ads, Considering 'Account Sharing Fee' Option
"Difficult to Assert Positive Effects of Account Sharing Restrictions"
[Asia Economy Reporter Oh Su-yeon] It has been revealed that the majority of Netflix users share their accounts with family members or others. Recently, as Netflix introduced an ad-supported subscription plan, there has been speculation about cracking down on shared accounts. About half of the respondents who share accounts with others said they would cancel their subscription if they had to pay additional fees for account sharing.
On the 24th, the Korea Information Society Development Institute (KISDI) announced in its report titled "Analysis of Paid OTT Service Usage Behavior: Focusing on Multiple Subscriptions and Account Sharing Behavior" that respondents use an average of 2.11 services, and 60.7% subscribe to two or more OTT services. Among respondents, 78.2% said they use Netflix. This survey was conducted among 1,508 internet users aged 20 to 59 across 17 cities and provinces nationwide who currently use paid OTT services.
56% of Netflix Users "Watch Together with Family or Others"
Among Netflix users, 42.8% use accounts registered under their own name. Six out of ten share their accounts with family members or others. Specifically, 35.1% share accounts under a family member’s name, 9.3% share accounts under another person’s name for free, and 11.5% share accounts under another person’s name for a fee. Free promotion users account for 0.7%, and others 0.6%. Even among those who responded that they use accounts under their own name, 23.8% share their accounts with others outside their family.
Sharing accounts with third parties outside the family violates the terms of service of most OTT providers as it leads to revenue loss. Netflix is actively responding by requiring additional payments for account sharing, especially in the Latin American market. In April, Netflix stated in a shareholder letter that while it had tolerated account sharing during subscriber growth periods, it plans to charge users who share accounts as subscriber numbers decline. According to Netflix, it is estimated that 100 million households worldwide and 30 million households in North America share accounts.
In March, Netflix began charging additional fees in Chile, Costa Rica, and Peru, adding a feature that allows sharing accounts with third parties outside the family. In July, Netflix expanded this by introducing the "Add a Home" feature in Argentina, the Dominican Republic, El Salvador, Guatemala, and Honduras, allowing users to add up to three additional locations for $1.70 to $2.99 per month (approximately 2,302 to 4,048 KRW), depending on the subscription plan.
Recently, as major countries including Korea introduced the ad-supported subscription plan "Ad-Supported Basic" as a new revenue model, there are predictions that charges for account sharing will expand. In Korea, the ad-supported Basic plan costs 5,500 KRW per month, but if four people form a so-called "4-person pod" and share the Premium plan (17,000 KRW per month), each pays only 4,250 KRW monthly. In Korea, it is common not only to share accounts among friends but also to split fees with strangers through online communities or sharing platforms. If account sharing among strangers is left unchecked, it could undermine the competitiveness of the ad-supported plan, which is a new revenue source.
In fact, less than a month after the introduction of the ad-supported plan, the industry reports that subscriber inflow has not been very active. According to a Consumer Insight survey, only 13% of respondents expressed a desire to use the ad-supported plan, while 51% said they did not want to subscribe.
Netflix’s recent introduction of the "Profile Transfer" feature in multiple countries including Korea also supports this speculation. This feature allows users who previously shared accounts with family or others to transfer their viewing history when creating a new account. It was first introduced in three Latin American countries in March when Netflix began charging for shared accounts.
Half of Account Sharers "Will Cancel Subscription if Charged"... Revenue Expansion Uncertain
However, increasing profitability by charging users who share accounts with others additional fees does not seem easy.
Among users who share their own Netflix accounts with others, 42.5% said they would stop using the service if required to pay extra fees. Another 33.3% said they would continue using the service but stop sharing their accounts. Only 24.2% said they would pay the additional fees.
Among those who share accounts under others’ names, 46% said they would stop using the service, 46% said they would pay the additional fees, and only 8% said they would create their own accounts. It is difficult to predict that restricting account sharing or charging additional fees will directly lead to increased revenue.
Kang Jun-seok, a research fellow at KISDI’s Broadcasting and Media Division, explained, "A significant number of paid OTT service users share accounts not only with family but also with friends or third parties such as online communities, either for free or for a fee. While it is true that account sharing may negatively impact the growth of the paid OTT service market, it is not easy to assert that restricting account sharing and charging fees will only have positive effects on related revenue growth."
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