Most subscription-based entertainment platforms run on password sharing. While the issue wasn’t that heftily monitored initially, Netflix is gearing up to find more ways to charge users for password sharing.
Recent reports suggest that Netflix will ask their customers from five Latin American countries to pay an additional fee if they wish to use their account in an additional home. This is a trial run that Netflix is kickstarting in the selected countries to generate an additional revenue stream.
The company reported that Netflix will charge an additional fee to their users living in Argentina, El Salvador, Guatemala, Honduras, and the Dominican Republic if their account is being used outside of their primary residence for more than two weeks.
The new feature rollout won’t affect the users who access theirs from their mobiles, smartphones, tablets, or people who go out on vacation. The additional cost will be 219 pesos in Argentina and $2.99 in other countries.
Netflix reported that over 100 million households use accounts that are paid for by other people. Password sharing has become a norm. The company also reported that password sharing is one of the major factors that is affecting their subscriber growth.
Also, the company lost over 200,000 customers in the first quarter of 2022. And, current reports suggest that the company is set to lose yet another 2 million in the second quarter. Also, Netflix’s share price has dropped by 65%, leaving investors with a lot of worries.
Chengyi Long, a director of product innovation further shared their insights in a blog reporting that password sharing is one of the main reasons why platforms aren’t able to invest rightfully in the long run.
The incidence of Netflix’s password sharing is predominantly high in Latin America, which is one of the reasons why the company is kickstarting its extra charges in there.
The main additional charge will be levied on the users when multiple people are using the same Netflix account and from different locations. Netflix currently has three different pricing plans – Basic, Standard, and Premium pricing plans.
The extra charge will be levied besides the standard base rates that are applicable for each pricing plan.
Whether or not Netflix plans to roll out this feature across multiple other countries is still a mystery at this point. Additionally, whether this new feature rollout will cut down Netflix’s subscribers is another factor that the company has to look out for.