Market-Share & Why Netflix Doesn’t Care if You Share Your Password

Most Families have a single Netflix subscription. Whether it’s a family of 3, or 13, there will be only 1 monthly payment charged to 1 member of the family.

And when the kids finally move out they will get their own Netflix subscriptions, right?

WRONG.

Well, at least not that fast. They will continue to use their parents forever, until one day, in the slight chance that their parents should cancel theirs, or a tragedy happens, they would buy their own subscription.

But it’s not just family sharing…

When we say “account sharing,” we are also talking about a practice that violates Netflix’s Terms of Use: the sharing of an account with friends, neighbours, internet strangers, and other grown adults that you don’t live with. This practice is widespread; it’s practically a touchstone of modern culture. With every nasty breakup, awkward move-in, or sudden bout of friendship-drama, somebody’s gaining or losing a free Netflix profile.

Twenty-four million people use a Netflix account that they don’t pay for according to an estimate from Cordcutting.com. That’s a lot of people. If an estimated 24 million people were using your product for free, wouldn’t you get a little upset?” – HowToGeek.com

Well, they’ve been wooing these kids and customers to their service for a looooong time. So they know a percentage of their audience, or someone in the family will always have to have at least 1 subscription.

Essentially, they’ve created their own market demand in their favourite customer avatar (The TV Watcher). An audience with hundreds of millions.

But Aren’t They Losing Money with only one subscription per family?

Let’s put it this way,

With an average US family size of 3.15 persons, (I know, statistics are weird) to make things easier we will say the US population size is 315 million, and we will say they all watch TV.

With one third of them then paying Netflix a monthly subscription (1 member per family), and the other 2 waiting to pay for it themselves…

They have capitalized on and cornered their market quite well if you ask me.

And it’s not just Netflix. A myriad of other subscription based and SaaS (software-as-a-service) companies are in no rush to crack down on password sharing any time soon. As we see this isn’t a new trick in the book either. Many grocers operate and sell certain products at a loss to keep customers happy, all the while making their money off the subscription, like Costco Wholesale.

In other words, punishing account sharers just isn’t worth the risk of losing market-share.

Cheers,

Mackenzie Andres

THE BLOCK BARD

Founder | CEO

http://www.theblockbard.com

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