The proliferation of OTT streaming services within the last decade changed how people consume entertainment content by granting the ability to watch anything at any time with no contract. Viewers today are comfortable moving between streaming services and sharing account credentials among friends and family to maximize their value. Further, the fragmentation of the streaming ecosystem combined with rising prices across platforms increases the appeal of account sharing on services like Netflix.
Parks Associates 2022 consumer survey research finds that 40% of consumers in US internet households share credentials or use shared credentials from others – this is up from just 27% in 2019. While this practice has become normalized among viewers, it is a problem for providers particularly as subscribership stagnates in well-penetrated markets like the U.S.
Netflix's main goal is to convert non-paying users into subscribers at some level, but it risks their subscribers viewing their actions as a penalty or rate hike at a time when many households are already reevaluating their budgets. Come November, viewers will have a choice to move to an ad-based tier if they do not want to pay for individual Netflix services.
The details of the new policy are still unclear, but members have come to expect the ability to view their streaming services wherever they are – which may limit Netflix’s ability to enforce policy by viewing location. US consumers in Internet households report watching 6.3 hours of video on their mobile phone weekly, up from just 3.8 hours in 2019. And for younger viewers, mobile is their primary viewing platform.
Netflix is showing it is sensitive to the user experience by giving viewers the ability to transfer their profiles to a new shared or ad-based account. Ultimately, As Netflix rolls out its new policy, the key is to be clear and transparent on what the policy means – and what it doesn’t.