You’ve probably heard that Netflix is no longer cool with password sharing. Despite the fact the company tolerated – no, it practically encouraged it for years – Netflix is now cracking down on customers who share their accounts with people outside of their homes.
It wasn’t that long ago that former CEO Reed Hastings said the company had “no plans on making any changes there”, when it comes to allowing password sharing. “Password sharing is something you have to learn to live with, because there’s so much legitimate password sharing, like you sharing with your spouse, with your kids.... so there's no bright line, and we're doing fine as is.”
OK, that was a 2016 earnings call, so it was a few years ago, but the company was pretty clear it was fine with password sharing as recently as 2021, when Hastings said Netflix would never roll out features that made customers feel like the company was “turning the screws” on them.
Of course, Hastings is no longer CEO of Netflix, and the company is very much not fine with password sharing. To the contrary, the company is rolling out plans to persuade subscribers to pay for anyone with whom they’re sharing their account.
The reason is pretty simple: Netflix has signed up all of the people who are willing to pay it money every month. Everyone else doesn’t think it’s worth it, or is already watching Stranger Things on their former roommate’s account. Last year, Netflix said it believed that sharing amounted to as many as 100 million people who weren’t paying for Netflix.
Look, two things can be true at the same time. First, Netflix is certainly within its rights to ask people who use its service to pay for it. It's hard to argue that people who share their accounts with people outside their household are entitled to do so forever.
On the other hand, just because you can do something, it doesn’t mean you should. And if your founder and CEO says the company is cool with something, it seems reasonable that your customers would think the company is, in fact, cool with it.
This is a great reminder of the fact that expectations are everything. When you create an expectation for people, and then you change your mind, it’s bad for everyone. It's bad for your customers for obvious reasons – they’re disappointed that a thing they came to rely on has changed.
It's also bad for Netflix. This is the tricky part, because clearly more people paying money for Netflix is good for Netflix, right? Sure, except for the part where you end up alienating people. What if, instead of paying more money to keep the extra users, your customers are annoyed that you've changed the rules and are trying to get more money on top of an already expensive service?
The unfortunate truth here is that Netflix is more concerned about being able to show growth, that it has lost sight of the fact that one of the things that made it such a beloved brand isn't just the content you could stream on your iPhone or TV. It was the way Netflix treated its customers.
Netflix certainly isn't the only company to make this sort of decision. And, to be fair, Netflix was in a lose-lose situation. As subscriber growth has slowed over the past year, the company has been under pressure to do something. It's simply not OK to say "we've signed up everyone who will pay for our service."
You know, having 200 million people pay you US$15 a month for the rest of forever is not a bad business at all. If you focus on making those customers happy, you're doing just fine.
Instead, growth, for the sake of growth, is the only thing that matters. Making freeloaders pay is the most obvious solution. The thing is, I'm just not sure it's actually the best solution. – Inc./Tribune News Service