Paid Account Sharing Expanded in Q2
Increase in Paid Members in Some Implemented Countries
Expecting 30% Paid Users Conversion Among 100 Million Households
"Looking for one person to join a Netflix 4-person group"
Recently, posts recruiting members to share Netflix accounts have been frequently found on online communities and social media. Some Netflix users have been saving costs by sharing one account among multiple people and splitting the subscription fee accordingly. However, this method of account sharing is expected to become impossible in the second quarter of this year.
Netflix announced that it will expand the countries where it applies the account sharing ban in the second quarter. Since February, Netflix has implemented this measure in some South American countries and analyzed that the increase in users creating personal accounts contributed to revenue growth.
According to the US economic media CNBC on the 18th (local time), Netflix plans to expand the ban on free account sharing starting in the second quarter. If free account sharing is prohibited, users are expected to pay an average of 3,000 to 4,000 KRW per person and add up to two additional sharing members. However, if account activity information such as IP address and device confirms that users live in the same household, account sharing will still be allowed.
Originally, Netflix planned to implement this measure in the first quarter, but delayed the plan after subscriber growth slowed in South American countries where free account sharing was banned. However, Netflix explained in a letter to shareholders that the initial cancellations of memberships led to a positive outcome of increased paid customers. Members who previously shared accounts with family or friends began creating personal accounts and subscribing to paid services.
According to Netflix statistics, currently, 100 million households worldwide are sharing Netflix accounts. The US investment bank Morgan Stanley estimated that Netflix could convert 20 to 30% of these 100 million households into paid subscribers through the account sharing ban.
Netflix took this measure as the rapid increase in new subscribers after COVID-19 slowed down again. Netflix’s new subscriber count in the first quarter of this year was 1.75 million, significantly below the market forecast of 2.41 million. First-quarter revenue was $8.162 billion, up 3.7% year-over-year but slightly below market expectations. Netflix stated that losses from account sharing have made it difficult to invest in new content.
Ted Sarandos, Netflix co-CEO, said in a virtual presentation that "The account sharing initiative (account sharing ban) is about creating a larger base to attract potential members," adding, "That is why we are implementing this measure."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
