Netflix Inc. asks customers living in Latin America to pay a small fee if they wish to access their Netflix account from another location. The company believes this will increase its revenue stream by encouraging customers to share their Netflix account.
The company announced Monday that customers in Argentina, El Salvador and Guatemala will have to pay an additional fee for using their account more than 2 weeks away from their main residence. This won’t affect the use of Netflix on mobile devices such as smartphones, tablets or laptops, nor will it affect people on vacation. In Argentina, the additional house will be 219 pesos (or $1.70), and in other countries it will be $2.99.
Netflix claimed that accounts purchased by others are used in more than 100,000,000 households. They also blamed password sharing to be the main reason for slowing subscriber growth. It lost 2 million customers during the first quarter and is forecast to lose 200,000 more the second. Investors are worried that streaming is hurting the company’s stock price and it has seen its share price drop by more than 65%.
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“Today’s widespread account sharing between households undermines our long term ability to invest in and improve our service,” Chengyi Long, a director of production innovation, said on the blog.
Latin America has seen password sharing spikes. Netflix will be conducting two trials to determine if users will pay to access the service. Netflix is trying limit the sharing of its content without penalizing those who pay Netflix and alienating customers. Some customers have been concerned that they might lose their access due to the way it was presented at times.
It is currently testing new ways of charging extra for people who want to share the same Netflix account. Customers in Chile, Costa Rica, and Peru were asked to pay an additional fee for adding a member to their accounts. The new member creates a sub-account using their email address. They get their own stream, can access Netflix simultaneously with the primary account holder and within their plan’s limits.
Customers can only watch one device per basic plan. Standard plans allow for up to two devices. Premium plans can accommodate four.
Customers who have multiple accounts in their household are subject to this latest test. In-app notifications will prompt customers to add or remove a household if they have used an account outside of one of their household’s paying areas for over two weeks.
Customers are able to control their home, adding and deleting as many people want. Adding households doesn’t increase the number of people who can watch Netflix at the same time.
(Updates to earlier tests in the sixth paragraph.
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