Netflix has officially pooh-poohed the idea that account sharing is a problem. From the Q1 2013 Netflix, Inc. Earnings Conference Call Q&A Transcript
, from the 22nd of this month (near the top of page 4):
Erin Kasenchak - Netflix Inc - Director of IR
How do you think about shared accounts? It grows your brand yet it is revenue lost. How do you think about the need or importance of cracking down on shared accounts?
Reed Hastings - Netflix Inc - CEO
It depends on what you mean by shared accounts. We usually like to think that a husband and wife can share an account and that that's perfectly appropriate and acceptable. If you mean, hey, I got my password from my boyfriend's uncle then that's not what we would consider appropriate. And so, we focus on serving the immediate family. We've got -- our standard plan has two simultaneous streams.
And, that serves the vast majority of families around the world quite well. There's a few times when the family is large that's two streams doesn't work and so we're now offering, or will be offering shortly, a four stream option for about a 50% uplift. But, again, as we said, we expect a fewer than 1% of our members to take that plan. So, the core focus is on the immediate family. And, we really don't think that there's much going on of the I'm going to share my password with a marginal acquaintance.
(Emphasis added). Either their estimates differ from Wedbush Securities' estimate of 10 million non-paying users or they don't think that 10 million is "much going on"
. I suppose that your sister or best bud living in other cities aren't "marginal acquaintances".
The financial analysts worry that Netflix's current price for streaming plans loses viability as they continue to grow and increase their reliance on streaming income. They see a crackdown on sharing as one possible way to avoid raising prices. If the analysts are right and all 10 million of the "freeloaders" opened accounts it'd be an additional 960M gross per annum--obviously all of them wouldn't open accounts but it's definitely worth going after a piece of that, if it can be done without unduly antagonizing existing subs.