Worried About Backlash, Netflix Delays Password Sharing Crackdown In U.S.

from the charge-you-more-money-for-a-worse-product dept

We’ve noted more than a few times that Netflix’s password sharing crackdown is a dumb cash grab, and illustrative of the company’s inevitable transition from innovative disruptor to the type of nickel-and-diming cable company Netflix originally disrupted.

Netflix’s biggest innovation in the last five years is this new plan to sock you with a $2-3 extra surcharge if they determine you’re sharing your password with someone outside of your home.

Netflix originally tried to use developing nations as guinea pigs for its new plan. It didn’t go well. In many of these countries, users found the restrictions cost restrictive, poorly managed, and confusing. In Spain, the move recently resulted in the company losing more than a million subscribers. This apparently shocked company executives, who now say they’re delaying implementation of the plan in the U.S.:

The company said it delayed its password-sharing crackdown to give it time to learn which approach was best for members and its business. As a result, the revenue from the change is now expected to come in toward the second half of the year, according to the people familiar with the matter. 

The best approach is to back off the plan entirely. There’s evidence that the company’s projections for how much money it can make off of annoying its customers aren’t based in reality, and that the defections could be higher than company projections. All to implement a fix to a problem that isn’t technically a real problem in the first place.

Netflix spent years encouraging password sharing as no big deal. Netflix also already consistently raises rates on its users. And the company already monetizes the thing it’s suddenly insisting is a huge problem by limiting the number of simultaneous streams per account (and nudging users to more expensive tiers if they want to stream numerous shows concurrently via the same account).

Netflix is correct to worry that imposing annoying new restrictions and surcharges could cause a notable exodus in a streaming market that’s increasingly competitive. But I’d wager the pressure to deliver improved quarterly returns to Wall Street at any cost (even if that means angering loyal users or tarnishing the brand longer term) will once again dictate all future momentum.

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Companies: netflix


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