"Account Sharing Allowed Only Among Household Members" Notice
Shared Plans Expected to Launch in March
[Asia Economy Reporter Kang Nahum] Global online video service (OTT) Netflix has started cracking down on account sharing in South Korea as well. Earlier, it announced plans to implement additional charges for account sharing worldwide in the first quarter of this year, leading to analysis that the paid account sharing process has begun domestically.
Account Sharing Ban Gains Momentum in South Korea
On the 1st, Netflix stated on its official website, "If a member's account is logged in or continuously used on a device that does not belong to the member's household, we may request the member to verify this before the device can be used to watch Netflix or ask the member to change the Netflix usage household."
To determine whether users are family members, information such as the IP address of the device logged into the account, device ID, and account activity is used. If it is confirmed that the user is not a family member during the verification process, content cannot be viewed.
Netflix sends a link containing a 4-digit verification code to the account owner's email address or phone number, and the owner must enter the code on the device displaying the verification request message within 15 minutes.
The industry views this measure as a preparatory step for paid account sharing. Netflix is piloting shared plans in some South American countries such as Chile and Peru. To share an account with a third party who is not a household member, an additional fee of $2 to $3 per person must be paid. Up to two people can share. Netflix distinguishes between cohabiting family members and third parties based on the account owner's IP address and account activity. Also, if the same account is logged in on multiple devices, a verification process is required.
Since Netflix announced in a shareholder letter on the 20th of last month that it would "significantly expand paid account sharing at the end of the first quarter," it is expected that a shared plan similar to that in South America will appear domestically around March.
Will It Be Beneficial or Detrimental?
Netflix appears to have started cracking down on account sharing to improve profitability. Netflix's revenue for the fourth quarter of last year was $7.85 billion, a 19% increase compared to the same period the previous year. However, net income was $55 million, and earnings per share were 12 cents, significantly down from the previous year's results (net income of $607 million, earnings per share of $1.33).
The number of paid subscribers was about 230 million in the fourth quarter of last year, only about a 5% increase from 220 million in the same period the previous year. It is essentially considered to have entered a stagnation phase.
Whether paid account sharing will lead to improved profitability is uncertain. According to a recent report by the Korea Information Society Development Institute (KISDI), among respondents (120 people) who use Netflix, 42.5% said they would cancel the paid service if they had to pay extra to provide their account to a third party. Meanwhile, only 24.2% said they would pay the additional fee.
However, Netflix expects that although some subscribers may cancel their subscriptions, if it continues to strengthen its content competitiveness, the number of accounts will increase in the long term, improving overall revenue.
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