Netflix Inc. has teased the U.S. rollout of a password-sharing crackdown, but one analyst wonders if the ongoing writers’ strike is delaying the company’s plans.
The streaming-media company has already started to clamp down on account sharing in other markets by limiting who can use accounts and charging more for additional access. JPMorgan’s Doug Anmuth wondered if Netflix
NFLX,
was rethinking a broader rollout at the moment, given the prospect of content interruptions.
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“Paid sharing is effectively a price increase, w/paid members sharing their password receiving less value for the same price, or potentially paying more to add an extra member. And for borrowers who currently do not pay, paid sharing means either activating their own subscription or being added as an extra member, or losing access to NFLX,” he wrote in a note to clients.
For that reason, “it’s possible that NFLX may not like the optics of implementing paid sharing while 11,500 WGA writers are on strike, w/production suspended or writing paused across at least a handful of NFLX titles including Stranger Things S5 & Emily in Paris S4, among others,” Anmuth continued.
Netflix didn’t respond to a MarketWatch request for comment asking when paid sharing will roll out in the U.S., why it hasn’t rolled out yet, and if the delay was at all due to the writers’ strike.
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The paid-sharing rollout is a critical element of Netflix’s financial story these days. Netflix estimates that some 100 million people were freeloading off of others’ paid Netflix subscribers, and Anmuth expected that Netflix would be able to get at least 30 million of those to start paying up, whether by becoming add-on members for existing accounts or new subscribers in their own right.
For that reason, a continuation of the writers’ strike “could further postpone revenue & subscriber acceleration,” he wrote.
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The writers’ strike also threatens to impact Netflix’s other hot initiative: its advertising tier. Anmuth noted that the company’s upfront presentation to advertisers, its first-ever, was turning into a prerecorded event, presumably because the company fears “heavy picketing and protesting” and “less availability of star talent.”
“[U]ltimately, advertising is closely tied to paid sharing, w/borrowers likely viewing a $6.99 Standard w/Ads plan as a compelling low-priced option,” Anmuth wrote. “Therefore, ramp of the ad tier is also delayed if paid sharing is delayed.”