CES 2016 just wrapped. And while there were many gadgets for those to peruse, you might have not heard about the Netflix news that made waves. What’s that wave you ask? Account sharing.
Yes, you heard me right. And it came right from the source. Which is to say Reed Hastings, Netflix’s founder and CEO, said that it’s 100% kosher to share your login with friends and those alike.
Now, you’re probably wondering why Netflix, who charges at least $7.99 a month to access their streaming service, would be cool with their subscribers in effect giving the service away for free.
There is one answer: more subscribers. But how? Well, apparently those that leech of their friends or family’s Netflix account go on to be come Netflix subscribers themselves. What the “take rate” is unknown, but it’s fair to say that once someone enjoys a service enough and find the value, they’re more likely to subscriber. Moreover, it could be argued that without those folks ever getting a taste they simply wouldn’t know what they were missing, which in turn means Netflix would never have a chance of them becoming a paying subscriber.
But what about those that don’t subscribe and just continue to leech? It’s true, many of those that borrow a Netflix login will never pay, at least not in the foreseeable future. But I assume until Netflix is able to determine this as a problem, they’ll continue to take a lax approach. And let’s be honest. If Netflix wanted to cut your leeching ass off, they could in a few key strokes.
Now, it’s important to note that Hastings addressed the “sharing of Netflix” within the context of family members, not specifically to friends. But clearly there is a gray area here since Netflix isn’t in the business of discerning who is family and who isn’t. But it’s in their best interest to not address this issue, or at least explicitly says sharing amongst friends is ok, as it would be hard for the company to revert or correct ship when and if they buckle down on sharing. To that end, Netflix doesn’t want to scare investors.
So why is Hastings cool with family sharing? Simple: indoctrination. He things kids and those within the family household will eventually grow up, gain access to disposable income and thus subscribe to Netflix.
As kids move on in their life, they like to have control of their life, and as they have an income, we see them separately subscribe. It really hasn’t been a problem.” Netflix’s CEO to CES reporters.