How Netflix wants to restrict the number of users who watch its content for free

Faced for the first time in 10 years with a drop in its number of subscribers, Netflix is ​​threatened with stagnation after a decade of growth. In the first quarter of 2022, the streaming platform lost 200,000 of its 221 million subscribers. From a distance, this loss may seem like a drop in the bucket for the Californian giant. But this shortness of breath worries investors. “Management has been pretty clear that we can only expect very weak growth in 2022 and 2023”Bank of America analysts said in a note.

In order not to lose money despite this slight decrease in its number of subscribers, Netflix wants in particular to attack viewers who watch its content without paying, thanks to shared identifiers. According to estimates by the American company, around 100 million people access the platform without paying anything. With a subscription to Netflix, a customer can indeed watch the videos on two, three or four different screens depending on the option subscribed. This often prompts users from different households to share a subscription. What prohibits however the charter of use of Netflix, which authorizes the sharing of screen only within the same household.

“When we were growing fast, it wasn’t a priority. And now we’re working hard on it.acknowledged the co-founder, Reed Hastings, during the presentation of the results for the first quarter of 2022. “We don’t want to stop this sharing”nevertheless warned Gregory Peters, operational manager, but “convert better” this undue viewing into revenue.

“We have a friend who subscribes to all platforms and he gave us his accounts”

Gaël, resident of Lyon and “clandestine” user of Netflix

Since the advent of streaming platforms (Netflix, Dinsey+, Prime Video, MyCanal, etc.), sharing identifiers has become a very popular practice. But in the event of a restriction on the sharing of access codes, are “clandestine” users ready to get their hands on the wallet?

“We have a friend who subscribes to all platforms and he gave us his accounts. If he stops his subscriptions, I think my girlfriend would want to keep Netflix. I don’t really know. Either just Netflix or nothing”explains Gaël, a manager in a humanitarian association in Lyon.

“We watch MyCanal thanks to the codes of my parents. But if they stopped the subscription, we would not resume it. We would not subscribe to a platform because of the prices and the fact that we can watch series on ‘pirate’ sites. I don’t have too many scruples when we watch big series”says Antoine, a young thirty-year-old employee in an urban development company.

Users who take advantage of account sharing without paying, Netflix must succeed in changing their minds without rushing them too much to prevent them from turning to other platforms or illegal streaming sites. “This is a problem that goes beyond Netflix and affects all video on demand (VoD) platforms. In the first quarter of 2022, Warner with its platform also faced this type of problem”says Louis Wiart, professor at the Université Libre de Bruxelles and specialist in streaming platforms.

According to this researcher, Netflix has also developed thanks to account sharing, which has allowed the American giant to make itself known very quickly to a large audience. “This practice of screen sharing between people from several different households was tolerated by Netflix and played in the development of the platform by encouraging the consumption of its content”.

Returning to this function could be misunderstood by the public. “There is a risk of damaging the brand image if Netflix stigmatizes the way its customers use its services. This is also a very widespread practice. The second risk is increased piracy. In the 100 million people who consume without paying, one can imagine that a part will not want to pay for Netflix”continues Louis Wiart.

To find out what the public is willing to accept regarding the sharing of identifiers, Netflix has launched a series of full-scale tests. In South America, the VoD leader will conduct an experiment in three countries: Costa Rica, Peru and Chile. Subscribers will need to pay a fee on top of their monthly subscription (approximately $3 in Chile, $2.99 ​​in Costa Rica, and $2.12 in Peru) to be able to add up to two additional accounts to their profile .

“We’ve always made it easy for people who live together to share their Netflix accounts, with features like separate profiles and simultaneous streams for our Standard and Premium subscriptions. While these features are hugely popular, they’ve also created a form of confusion about when and how Netflix could be shared”Chengyi Long, director of product innovation at Netflix, said in a statement on March 16.

A second option is being tested: “clandestine” users who take advantage of a subscriber’s codes can switch their profile (on which their preferences, current viewings, etc. are recorded) to a new account. “The goal is to encourage people who benefit from account sharing to subscribe themselves while keeping their history”notes researcher Louis Wiart.

“There is supposed to be a check to see if we share the same household, but we never received anything”

Quentin, 29, resident of Rennes

In 2018, it was Spotify, the leader in music streaming, which tried to restrict the excessive sharing of its “family” service, which allows access to the platform from several screens. “They had changed the terms of use of the family account by controlling more precisely the address of users to restrict its use to people from the same household. Spotify had first tried to control where users lived thanks to geolocation. But faced with the anger of users, they backtracked. Since then, they have been controlling the address by sending identity verification requests to subscribers”, notes Louis Wiart

This increased control of Spotify is not very effective according to users. “My parents have a Spotify family account and I use it without living with them. There’s supposed to be a check to see if we share the same household, but we never received anything. It looks more like an announcement effect”, admits Quentin. He lives in Rennes, a few dozen kilometers from his parents.

The risk for Netflix with this policy of restricting access to its platform is losing subscribers without gaining new ones. On social networks, many Internet users say they are waiting for the release of exclusive and quality series and films on Netflix, which is facing increasingly strong competition from Prime Video and Disney + with an offer of big productions in recent months.

But the problem is that production costs are exponential for Netflix: from one billion euros in 2010, they jumped to 20 billion in 2020. “The real question is: does Netflix produce content that satisfies their audience? On social networks, fans point to the poor production or productions, below expectations”points out Louis Wiart.

“With competition, it takes a lot of content to attract viewers. If Netflix continues to have more subscribers than others, when it’s easy to unsubscribe, it’s because it’s still perceived as being the best value for money”nuance Julien Pillot, associate researcher at the CNRS and specialist in the digital industry.

Friday May 13, Netflix announced the end of the French series Funnycritically acclaimed, so there will be no second season. Asked about the reason for the non-renewal, Netflix mentioned the need for a fair relationship between “audience and manufacturing cost”. An arbitration that the spectators will perhaps not hear with the same ear.