During its first-quarter earnings call, the company announced that it will expand its test that charges members a higher price if they share their account with people outside of their household. In March, the company began testing the feature in three Latin American countries, but now says it will be implemented in global markets in around a year's time.
The streamer said it will need to continue to make changes to the feature for roughly a year or so to make sure it gets the balance right.
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We have been working on this for almost two years, and a little over a year ago we started doing a light test that informed our thinking.
The option to add sub-accounts to their service for people they don't live with is currently being offered to the Standard and Premium subscribers in its handful of test markets. Each sub-account will have its own profile and personalized recommendations, but they also have their own login and password. They will become an established member with their own account in the future. If they decide to make that move, their viewing history, watch list, and personalized recommendations will transfer over to their own account. Since the member sharing their account now has to pay more, they may choose to push the freeloader off their account when the new charges kick in.
This solution doesn't rely on location-based data, as was previously stated. Instead, it uses the same information it uses to give its service to its end users, including anip address, device IDs and other information. When persistent sharing takes place outside a household, it can be identified by this method.
The sub-accounts do not count as subscribers if they are still sharing accounts with another household.
Over 30 million of the 100 million households sharing their user accounts are in the U.S. and Canada alone.
By asking members who are sharing their accounts to pay more, it hopes to strike the right balance between still allowing sharing to take place while also helping to bring in revenue from everyone who is viewing and getting value from its service. The value of the dollar and cents is yet to be determined, and may vary between markets.
The additional cost for non-household members in its test markets is 2,380 CLP in Chile, $2.99USD in Costa Rica and 7.9 PEN in Peru. This is less expensive than a full account plan, but it is more expensive than before.
This isn't the only way that the company is going to make money. The company will introduce an ad-supported plan.
Netflix to introduce ad-supported plan
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