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Netflix showcases new strategy to take on account sharing as it loses 1mn users

Netflix showcases new strategy to take on account sharing as it loses 1mn users
Photo Credit: 123RF.com
20 Jul, 2022
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US-based video streaming company Netflix has announced that in a bid to further crack down on account sharing, it is adding a new feature that would define a user's default location as a 'home'. In essence, it would use a user's internet protocol (IP) address to identify their most frequented location as a primary terminal – and charge a premium for adding further 'homes' to their accounts.

In a blog post published Tuesday, Chengyi Long, director of product innovation at Netflix, said that the plans will be tested in Argentina, the Dominican Republic, El Salvador, Guatemala, and Honduras starting next month. The move follows a trial period adopted by Netflix in Chile, Costa Rica, and Peru to add an extra member to a primary paying account for a subsidized fee. The new 'home' feature will essentially work the same way.

The new 'home' additions would cost an added 219 Argentine Pesos (approximately ₹135) – over and above the subscription price for its Basic, Standard and Premium tiers. In India, Netflix also operates a 'Mobile' plan that is priced at ₹149, and offers a single-screen, mobile-only access to its content.

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The move comes as Netflix posted better than expected financial results in its quarterly earnings call on July 19. While the company had expected to lose up to 2 million paying subscribers between April and June this year, it reported a total churn of close to 1 million subscribers during this period – its biggest quarterly decline in subscriber base in its entire history of existence. This is also the second consecutive quarterly decline in subscriber count for Netflix, which lost 200,000 subscribers in the first three months of this year.

"Today’s widespread account sharing between households undermines our long term ability to invest in and improve our service," Long wrote in the blog post.

The post echoed Netflix's regulatory filing this quarter with the Securities and Exchange Commission (SEC) in the US, which stated that while the platform remains "confident and optimistic" about growing its revenues and subscriber base in the coming quarters, the "big" challenge lay in "reaccelerating revenue growth".

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Calling the predicament a "great test", Netflix further added in its SEC filing that it is looking to roll out an advertisement-supported streaming plan in the near future. However, there are no details so far in terms of how much its ad-supported plan would cost (or if it would be entirely based on advertisements).

A Netflix spokesperson further added that the company plans to make "large amounts of spending on advertising" in the near future, and it has no plans to entirely replace its subscription service with ad-supported streaming.