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Things are heating up for Netflix users who share passwords among themselves. The streaming giant plans to launch pushes for free users in its key markets by the end of June, after a one-month delay.
For users who do not live under the same roof as the account holder, extra money has to be paid. At the same time, the end of a relic from a bygone era when the company’s history began: DVD rentals by mail in the US.
Netflix assumes that around 100 million households use the service with the login data of others. That’s a high percentage of 232.5 million paying customers in the last quarter. Netflix has long tolerated the sharing of credentials. In the meantime, however, there has been a growing focus on profitability in the video streaming business overall as many providers have been chasing higher user numbers for years.
Netflix is getting hot now
As new co-boss Greg Peters said about the latest quarterly numbers in a video conference Wednesday night, Netflix was considering taking action against free users in general in the first quarter. However, the company took a hiatus after departing in Canada, Portugal and Spain in February.
Peters pointed out some issues with the transition. In the past weeks, work has been done to ensure that users can access Netflix seamlessly, for example, while traveling. One got the feeling that “it would be better if we spend a little more time”. Netflix does not provide any information on exactly how systems recognize unauthorized multiple use of login information.
Peters said Netflix sets prices for additional users of a non-household account on a per-market basis. When it started in February it was 3.99 euros per month in Portugal and 5.99 euros in Spain. In Germany, the price is more likely to be at the upper end of this range. At the same time, Netflix introduced a cheaper subscription model with ads.
Canada best example
Netflix is betting that the movies and series on offer are attractive enough to pay today’s free riders. After the experiences in the first countries, the service is encouraged in this regard. Peters acknowledged that as with price increases, the first reaction is to do without it. But in Canada, you now have more paying users and more sales than before.
Netflix could use such support. The number of customers increased by 1.75 million in the first quarter. Experts expected a much stronger increase. The outlook for the current quarter was also mixed. Netflix expects a rise only in the second half of the year.
In the three months to the end of March, Netflix increased its sales by nearly four percent year-on-year to $8.2 billion. Profits fell nearly 18 percent to a bottom line of $1.3 billion. Netflix doesn’t expect a big jump in the second quarter – revenues and net income will likely lag more or less.
Netflix ends DVD rentals
Netflix also announced that it will stop renting DVDs in about 25 years. Shipping by mail was the company’s original business model, which was founded in 1997. Legend has it that Netflix’s story even started with a rental video.
Founder Reed Hastings, as he later said, lost a videotape and was annoyed by the video store’s overdue fines. This gave birth to the idea of a DVD flat rate business. However, in the streaming age, this service hasn’t played much of a role anyway. Netflix justified the end with low usage.
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
