Could Basic With Ads Plan Save Netflix from Subscriber Disaster After Cracking Down on Password Sharing?
It appears Netflix is serious about its intentions to crack down on password sharing, this time. Company executives have confirmed new rules to stop customers from sharing their accounts with non-subscribers will be introduced sometime during the second quarter of 2023.
New information from the data analysis firm CivicScience is once again showing how much of a potential issue these plans could cause the world’s largest streaming service. Current users of Netflix report being “somewhat” or “very likely” to cancel their subscription at a rate of 70% if the new rules go into effect. Among customers who say they intend to subscribe to Netflix, a whopping 86% say password sharing restrictions could affect those plans.
The data reinforces other surveys that show a large percentage of Netflix users would strongly consider leaving the service if rules against account sharing are enacted. But money talks, and with some analysts projecting Netflix could stand to make $3.5 billion by stopping users from sharing their login credentials, it’s hard to imagine the streamer changing course.
Fortunately for Netflix, it may have a solution for keeping users with the service already on the market. After years of resisting ad-supported streaming on its platform, Netflix released its Basic with Ads plan in November of 2022. Users were slow to warm up to the plan, but now Basic with Ads has more than 1 million domestic subscribers, and 10% of customers who are considering giving Netflix a try say that’s the plan they’re most interested in.
Basic with Ads might be just what the doctor ordered to keep price-sensitive consumers interested in Netflix once the company makes it harder to share passwords. That’s a big need, as CivicScience’s data shows Netflix intenders are more likely to be concerned with price as their top overall factor when considering whether or not to sign up for a streaming service. Thirty-five percent identify cost as the top consideration, followed by 31% who cited content variety. It’s quite likely that some of these intenders are password sharers already, given that cost is one of the biggest reason they don’t have their own account already.
Rules to stop password sharing that are already in effect in Canada give a hint as to how Basic with Ads could serve those users. Netflix’s Standard plan is CAD $16.49 (USD $15.49), and it costs CAD $7.99 monthly to add a user outside the home to their account. But a Basic with Ads subscription is only CAD $5.99 per month (same price in the U.S.), meaning it will almost certainly be cheaper for domestic users to get their own account rather than pay another account holder to continue sharing their login information.
CivicScience’s numbers also show that the demographics align well if it wants to use its Basic with Ads plan to catch users who might otherwise churn away. Younger generations who are more likely to be sharing Netflix accounts currently are the most likely to be willing to use the Basic with Ads plan. Fifty-six percent of Gen Zers acknowledge they’d use the plan, along with 43% of Millennials. The account sharers among these groups could well decide that asserting their independence from parents, or whoever else is paying for their Netflix, is worth the extra $6 per month.
There’s nothing Netflix can do to stop all users from canceling when they roll out guidelines to stop password sharing this quarter. Some users will definitely leave the service for good, but there’s a very good chance that Basic with Ads will prevent a massive exodus of users by providing them a relatively inexpensive way to keep accessing Netflix.
Netflix
Netflix is a subscription video streaming service that includes on-demand access to 3,000+ movies, 2,000+ TV Shows, and Netflix Originals like Stranger Things, Squid Game, The Crown, Tiger King, and Bridgerton. They are constantly adding new shows and movies. Some of their Academy Award-winning exclusives include Roma, Marriage Story, Mank, and Ma Rainey’s Black Bottom.