Netflix Takes a Stand Against Shared Accounts: The Implications and Outcome
Convulsive week. What we have been waiting for years has happened. Netflix has launched in Spain and other countries its plan to put an end to unpaid shared accounts. From now on, the company will not allow, except through the use of paid subaccounts, to use the same account in two or more homes.
This was no less surprising because it was predictable. The concept of “ending shared accounts”, as a concept, is one of the great melons that the technology industry has not opened for years. Netflix was the first major company to do so. Therefore, despite being quite limited in scope and outside of its major market, the United States, it is one of the greatest technological experiments in history.
Because of what it will mean for the biggest streaming giant (which will decide whether to expand it or not depending on how it turns out), because of what it will mean for the subscription era and, above all, because of everything it will tell its competitors. Facing the same problem, they will not have to be brave and throw the first stone.
Shared Subscription Accounts: A Longstanding Concern in the Streaming Industry
The fear of shared accounts being cut off has been around for years among the subscription-using public. It happens both in those like Netflix, designed for a household, with configuration in profiles, and in those that directly propose family plans, such as Spotify or Apple Music. Basically, they ask for the same thing: use your account with people who live with you.
The reality is that accounts are used with family members, but also with friends or even people with whom you reach agreements in social networks, forums or platforms to share an account. Companies know this, and Spotify has been warning about it for years. In tests, they have flirted with asking to access our location to verify that all members of the same “family” are, indeed, family in terms of housing.
As of today, the company states on its website that “we do not track your location. We only ask that you provide us with your address for verification”. Specifically, they request that the account administrator and other family members provide their address. But if they don’t actually match, that’s okay. It’s been almost five years since Spotify tried getting more serious about family accounts. We don’t know why it hasn’t, but they probably anticipate a massive cancellation on family accounts.
On motives, Netflix long ago made clear their reasons for making this week’s big decision (and more importantly, what allowing account sharing has brought them):
Sharing has likely helped drive our growth by getting more people using and enjoying Netflix. And we’ve always tried to make sharing within a member’s household easier, with features like profiles and multi-streaming. While [these sharing options] have been very popular, they have created confusion about when and how Netflix can be shared with other households.
Even if it’s no longer a test, Netflix is a gigantic experiment. One that no one else has dared.
Netflix Leads the Charge Against Shared Accounts: The Impact on the Streaming Industry
Finally, Netflix has overtaken Spotify by daring to fight what was holding back (in part) their revenue, and being a publicly traded company, and therefore obliged to break down their numbers with transparency, they are doing a huge favor to the rest of the competitors.
This move is gold for them. First, because it can erode Netfix. Secondly, because it has shown its cards, and depending on how the red giant fares, they will be able to decide accordingly.
If the biggest streaming giant does badly in the end, why would others with less name and commercial power like HBO Max or Prime Video follow suit? No doubt, they are watching, and showing their paws. In the past, like HBO Spain, Warner restricted registration on devices. But, being more cumbersome to share account like that, they never really prevented it.
Until now there was something similar in place: price hikes. But shared accounts cushioned any increases, particularly on the Premium plan, which went up pennies when shared among four people. Now, by making many more users pay the official price, we’re going to see how powerful video streaming really is. And if those who paid €4.5 to watch Netflix in 4K now pay €9.99. Gigantic experiment.