Netflix has stepped up its control over password sharing, a change that could reap billions of previously lost revenue, but the company acknowledges that it is a delicate process.
“We’re testing a lot, but we’re never going to release something that feels like we’re turning the screws on consumers,” co-CEO Reed Hastings said during the company’s first-quarter earnings interview. “You have to feel that it makes sense for consumers, that they understand it.”
The tests, which were unveiled earlier this year, aim to “harmonize with the way consumers think about it,” Hastings added.
Netflix missed its own broad-based subscriber growth forecast, reporting 208 million global subscribers at the end of the quarter. Wall Street analysts and investors have increasingly wondered how much the company could earn, asking each viewer to be properly connected to their own account. Citibank analyst Jason Bazinet recently estimated that the company loses $ 6 billion a year without limiting practice.
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Greg Peters, COO and product director of Netflix, said the company was “considering sharing” for a while, which he described as a way to “continually improve the service.”
Netflix seeks to reach a set of subscription and pricing packages that offer value and accessibility in a wide range of socio-economic circumstances around the world. “While we do this,” he continued, “the goal is to make sure that we are good at making sure that people who use a Netflix account – who access it – are the ones who are allowed to do so.” . ”
Fidelity Management & Research’s Nidhi Gupta, who moderated the earnings interview, asked Peters which regions of the world see the most rampant password sharing.
“We see different ranges of behavior,” Peters said, refusing to be more specific. “The way people look at work is different from country to country.” He added that for some customers, sharing their password is not unfavorable and can actually be a sign of loyalty and affection. “It’s more than just the way they think about how I think the system works,” he said, “it’s the way they think about sharing the service with a family member or someone they love.”
The patterns of how this change is taking place are “all different on the planet and different within countries,” Peters added.