Earlier this month, Netflix made headlines for announcing the upcoming testing of a paywall on password sharing in Chile, Costa Rica and Peru.
While the company has since told MobileSyrup it has no plans to expand this test to Canada, consumers have nonetheless been wary.
Now, a group of analysts has worked out a rough figure for potential revenue should Netflix introduce paid password sharing worldwide. According to U.S. analysts Cowen & Co., Netflix could bring in an additional $1.6 billion USD (about $2.01 billion CAD) globally each year.
For context, Cowen & Co.’s estimate would be about four percent of the company’s projected $38.8 billion USD (about $48.8 billion CAD) revenue for 2023.
How the firm came to this conclusion was that it assumed password sharing — which includes two extra accounts — would cost around $3 USD (about $3.77 CAD), which is what it’s set to charge during the test in the aforementioned countries. From there, Cowen & Co. projects that about half of non-paying Netflix password sharing households would become paying members, and half of that group would opt to sign up for their own accounts.
However, other analysts were skeptical Netflix would make that much off of paid password sharing. Per Deadline, Benchmark Co. analyst Matthew Harrigan said he expects that revenue would be less than that four percent, arguing that it “cannibalizes full-ride member growth.” In either case, both projections should naturally be taken with a grain of salt.
For now, it remains to be seen what Netflix will do following these international tests. It should be noted, though, that Netflix acknowledged the loss of potential revenue from password sharing in its original blog post announcing the test:
“We’ve always made it easy for people who live together to share their Netflix account, with features like separate profiles and multiple streams in our Standard and Premium plans. While these have been hugely popular, they have also created some confusion about when and how Netflix can be shared. As a result, accounts are being shared between households – impacting our ability to invest in great new TV and films for our members.”
The company also added that password sharing violates its terms of service, although it hasn’t ever prevented people from doing so.
Regardless, the news has not been well-received, especially as the streamer has increased prices in Canada twice within two years. The popular Twitter account ‘Poorly Aged Things’ even posted a screenshot of a 2017 tweet from Netflix’s main account that “Love is sharing a password.”
— Poorly Aged Things (@PoorlyAgedStuff) March 21, 2022
Many people have since responded to Netflix’s original tweet to express their frustration with the planned password sharing paywall test.
Via: Variety
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