No need to tell you what Netflix is. The Internet media streaming platform has revolutionized how we watch TV – on-demand, commercial-free, and in bulk.
Well, it’s hard going when your audience knows exactly what they want, are extremely well-researched, and, let’s be real, super cheapskates. The internet has flattened the world, and legitimate business models rub close shoulders with pirates of the digital seas. Too many options, and all of them just as easy.
While Netflix has managed to carve out a piece of the internet for itself and make a profit, it hasn’t been without many bumps along the way – about 10 million people watch Netflix without paying for it by sharing passwords – and has been in the process of flip-flopping between strategies to figure out how best to deal with these kinds of people.
Individual Profiles
In August 2013, Netflix introduced individual profiles on accounts. Previously, the streaming service had kind-of-but-not-really allowed subscribers to share with their freeloading friends and family in their Terms of Agreement:
YOU MAY INSTANTLY WATCH ON UP TO SIX UNIQUE AUTHORIZED NETFLIX READY DEVICES. YOU WILL BE ALLOWED TO INSTANTLY WATCH SIMULTANEOUSLY ON TWO SUCH DEVICES AT ANY GIVEN TIME
With the new roll-out of individual profiles, the recommendation algorithms and viewing histories for one user wouldn’t be affected because their best friend is a foreign movie buff. The intended audience for this split was for families, recognizing that parents will want to watch stuff that has nothing to do with Sunday morning cartoons. According to the Netflix blog:
I’m sure many of you have had similar experiences, where you sat down to find something great to watch on Netflix, but it looks like your spouse has been binging on those teenage supernatural dramas you can’t stand, or your kids have filled your viewing history with animated sheep.
Of course, this also meant that things just got easier for any group that shares the monthly fee.
Now Netflix is trying a different tactic.
Maybe too many people started trying out their friends’ Netflix service without any additional income for the streaming service. It seems Netflix has tried to focus on a different group entirely – the lonely ones. They recently rolled out a subscription tier that charges new users $6.99 per month for a single standard-definition stream – no more sharing with friends and family.
It is to their credit that they continue to work with the password-protect model rather than striking hard on freeloaders, since they are one of the reasons the service has gained so much popularity. Subscription counts have passed HBO’s domestic subscription count (which already boasts 40 million subscribers).
Another thing is that Netflix has been integrated with pretty much any device – browser, mobile, tablet, even your favorite console. You might not have been able to afford armfuls of games once you shelled out for your new Xbox One at launch, but you could certainly use it as a very pretty Netflix box right off the bat.
Until now, the company’s cheapest streaming-only offer was $7.99/month for simultaneous streaming on two screens at once in standard or high definition. Users could opt for an $11.99/month plan for up to four screens at a time in standard or high def.
The $6.99 plan is currently only available for new users – and being treated primarily as a test, feeling around for interest. According to one Netflix spokeswoman:
“We always are testing new things and this is a test for a $6.99 single stream plan. … Not all people will see this option and it may not be something we ever offer generally.”
If it’s successful, the plan might be offered to existing members who live alone and are of the opinion that if you want it, you can pay for it your own damn self. It may certainly entice some new audiences to try out the streaming service, but whether this will do Netflix any favors when it comes to increasing their profit margins is debatable.
Would one dollar of difference make or break your decision to subscribe to Netflix? For me, not so much. But it does look like pretty big opportunity for existing members to downgrade their subscriptions permanently – and that might hit Netflix a little harder than they think.
