![]() ![]() “A Netflix account is meant to be shared in one household (people who live in the same location with the account owner),” the company says on the customer-help section of its site. It first cited that figure a year ago, when the company told investors it was focusing on generating revenue from password-sharing users. ![]() Netflix estimates that passwords are being shared in violation of its rules with more than 100 million non-paying households worldwide. Longer term, paid sharing will ensure a bigger revenue base from which we can grow as we improve our service.” As noted above, while this will shift some of the membership growth and revenue benefit from Q2 to Q3, we believe it will result in a better outcome for our members and our business. Instead of launching the paid-sharing plans broadly in late Q1, Netflix said, it “found enough improvement opportunities in these areas to shift a broad launch to Q2 to implement those changes. “With each launch, we learn more about how best to roll out these changes and what matters to members the most, in particular maintaining travel/watching on the go and the ability for people to better control access to their accounts as well as transfer profiles to separate accounts,” Netflix said. In Canada, which Netflix believes is a “reliable predictor” for behavior in the U.S., its paid membership base is now larger than prior to the launch of paid sharing, while revenue growth has accelerated and is now growing faster than in the U.S. “But as borrowers start to activate their own accounts and existing members add ‘extra member’ accounts, we see increased acquisition and revenue.” ![]() “As with Latin America, we see a cancel reaction in each market when we announce, which impacts near-term member growth,” the company said in the Q1 shareholder letter. ![]() The company does provide financial guidance but said the rollout of its paid-sharing initiative and ad-supported plans “leads to less-than-normal visibility.” However, it said it projects Q2 paid net adds “roughly similar to” to the first quarter, when it gained 1.75 million. Starting with the last quarter of 2022, Netflix was no longer providing subscriber-growth estimates for the following quarter. “This will not be a universally popular move,” Peters said on the Q4 2022 earnings interview in January, likening it to an uptick in churn when the company has raised prices on its streaming plans. Netflix said the move to convert password-piggybackers into paying members produces an elevated volume of cancelations, leading to a hit on near-term subscriber growth. Netflix’s paid membership count does not include “extra members” rather, the total revenue from a primary account and its sub-accounts result in higher average revenue per membership. That came after Netflix last year launched paid-sharing tests in three Latin American countries (Chile, Costa Rica and Peru). The four markets it is referring to are Canada, New Zealand, Portugal and Spain, where in February Netflix launched a “buy an extra member” option that lets primary account holders pay an additional monthly fee for a sub-account for 1-2 people they don’t live with. The paid-sharing program will debut in Q2 in the “vast majority” of countries where Netflix offers service, co-CEO Greg Peters said on the earnings interview, with pricing varying by market. ![]()
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