The elimination of Netflix passwords can be “a positive factor in the long term” – Deadline

One analyst says Netflix’s decision to better police password sharing could be beneficial for the streamer in the long run.

Netflix sent a message this week to some accounts with multiple users, threatening them with a service cut if they illegally shared passwords, but offering the incentive of a 30-day free trial in certain territories. The message said, “If you don’t live with the owner of this account, you need your own account to continue watching.”

Netflix said the change was “designed to help ensure that people using Netflix accounts are authorized to do so.”

Research firm Magid claims that 33% of Netflix users share their passwords with at least one other person. This led an analyst to applaud the attempt to isolate the profiteers while discounting the negative consequences of such actions during a pandemic that left many prisoners at home and unemployed.

“It is very difficult to estimate the impact this would have, but my feeling is that it would be a positive result in the long term because I think the number of password sharers is now a very significant number,” said CFRA analyst Tuna Amobi Yahoo! Finance.

“There would be some immediate negative impact in terms of turnover. But it is very easy to see how part of that impact would be canceled in terms of the potential absorption of certain customers who have been affected, ”he said.

Amobi suggested that the crackdown was a test of loyalty that could encourage those who obtained the service for free to sign up.

Netflix is ​​far from needy. The company’s revenue in the fourth quarter of 2020 totaled more than $ 6.64 billion in the U.S., up from just over $ 1.18 billion in the corresponding quarter of 2019. Netflix estimates it will spend $ 19 billion on content this year.

However, research firm Parks Associates, in a report earlier this year, estimated overall losses for password sharing streaming services at $ 9.1 billion, projecting that the number will reach $ 12.5 billion in 2024.

“This carries some risks, but I believe it would not be radically different from what some of the other service providers are already doing now,” added Amobi. He warned that “family users” should be treated with care, but added: “I hope they can find something to track down real abusers, but this is not rocket science. There was always a solution to this, but I was surprised that it took them so long to get to it … I thought it was time. “

The number of accounts capable of transmitting simultaneously is considered in the subscription price. The $ 9 Basic plan allows only one device to be streamed, while the $ 14 Standard plan doubles that and the Premium level expands to four devices. Netflix’s terms of service say that a subscription is “for your personal, non-commercial use only and cannot be shared with people outside your home.”