With Netflix annual price increases and severe shortage of sitcoms, account sharing can look much more appealing than a month's subscription fee. But how does Netflix feel about account sharing and why hasn't the company stopped the exercise?
Everyone shares a Netflix account
Twenty-four million people use a Netflix account they do not pay according to an estimate from Cordcutting.com. There are many people. If about 24 million people used your product for free, wouldn't you be upset?
But Netflix must know that it has an account sharing problem. Again, it is practically part of our culture. So how does Netflix deal with account sharing and exactly how much money does it lose?
If you can't beat them, offer family plans
Punishing Account Sharers is not worth the risk. If the company writes an account participant algorithm, there is a chance that families would be improperly banned or revoked to share an account. It's just bad PR.
So, as a skilled fighter, Netflix chooses to swing. The streaming service has made account sharing more appealing by adding a "profile" feature. Netflix also offers premium plans that allow you to watch Netflix up to four units at a time. These family plans are beneficial to account operators and they give users the reason to pay Netflix extra $ 7 per month.
Although it is reasonable to argue that family plans and profiles exist for real family use, it is difficult to deny the fact that these features make it easy to share account sharing with the person paying for the account.
Account sharing is very beneficial for Netflix
With account sharing you can save a lot of money, but how about Netflix's wallet? Reed Hastings claims the company is "good" despite account sharing, but exactly how much money does Netflix have?
Account sharing costs Netflix about $ 2.3 billion a year, according to an estimate from Cordcutting.com. Yes, this estimate assumes that every Netflix bum would actually pay an account if they should, but it still gives you a pretty good idea of the money Netflix lacks. If yet another third of the account holders paid for a Netflix account, the company would have a net of $ 660 million each year.
For a company that is $ 12 billion in debt, money can be a valuable asset. So, should these estimated losses affect Netflix? No, not really.
For one thing, Netflix family plans work as a concession for these losses. A four-speed "Premium" Netflix account costs $ 7 (or 43%) more per month than a "Basic" Netflix account. Technically, these "Premium" plans provide Netflix at least an additional $ 100 million per year, provided the 24 million Netflix piles log into "Premium" plans.
In addition, account sharing helps the Netflix brand compete with Hulu's aggressive marketing tactics. Hulu, recently acquired by a billion-dollar company named Disney, is committed to a loss. Basically, the streaming service offers its basic plan for an unsustainable $ 6 per month in an effort to extinguish Netflix. Although a Netflix subscriber switches to Hulu, they can still stick to the Netflix brand by logging into a friend.
Algorithms Could End Account Sharing
Why did Netflix not end account sharing? Although it is possible that the company really does not care about sharing accounts, it is also possible that Netflix does not have the resources to find and punish account participants exactly. If the company were to roll out an algorithm that discovers and bans account divisions, it could inadvertently punish legitimate account operators, such as families or roommates. This practice would be grossly unfair, it would jeopardize the legitimacy of Netflix's family plans, and it would damage the Netflix brand.
This is where Synamedia comes in. Synamedia, a British company formerly owned by Cisco, recently presented a "Credentials Sharing Insight" algorithm that "temporarily turns password sharing into incremental revenue." Basically, this European company has an algorithm that correctly identifies account sharing.
Assessment of Synamedia's claims is this algorithm extremely effective. It can show habits and habits of a user to identify when non-paying viewers log in to an account. It can detect if a user is looking at their home or a "vacation home". It can also detect if a subscriber has "adult children from home" so streaming services will not penalize the wrong persons for account sharing.