On Wednesday morning, millions of subscribers in Latin America woke up to an email from Netflix, announcing that the streaming giant was immediately suspending its experimental pricing trial in Argentina, El Salvador, Guatemala, Honduras, and the Dominican Republic. Abandoning part of its password crackdown strategy after six months, Netflix will be bringing its other ongoing pricing trial, which it first rolled out in Peru, Chile and Costa Rica, to subscribers worldwide in 2023.
Since August, when subscribers in Argentina used their account for an extended time outside their household, they were prompted to purchase a new “home” account for an additional permitted location. “After listening to consumer feedback, we decided to discontinue the ‘add a home’ feature,” said the email, a version of which was also sent to users in El Salvador, Guatemala, Honduras, and the Dominican Republic.
Last month, Rest of World reported that Argentine subscribers met the trial rollout with coordinated backlash on social media. Subscribers launched the trending hashtag #ChauNetflix (#ByeNetflix) and posted screenshots of their subscription cancellations after the trial was announced in July. But celebrations over Netflix’s reversal in the country this week may be short-lived.
While “add a home” charges are suspended, Argentines are likely to experience a new password crackdown within months. Earlier this week, Netflix’s COO and chief product officer, Greg Peters, confirmed the company would be rolling out its password-sharing crackdown globally, starting in early 2023.
As it has already done in Peru, Costa Rica, and Chile since March, Netflix will be charging subscribers to “add extra members” to their account, focusing on additional users rather than additional locations.
The minutiae of this pricing strategy was not decided in a vacuum, but is the result of Netflix’s closely studied pilots. After looking at feedback from both pricing experiments deployed across Latin America, Kumiko Hidaka, director of global product and technology communications at Netflix, told Rest of World that adding members rather than households afforded users more flexibility.
Netflix has also launched a new feature that will let individual users transfer viewing histories and personalized recommendations to new accounts, once the restrictions take hold. Hidaka declined to comment on whether they had seen subscriber losses in markets where “add a home” was tested.
Some experts suspect that, given the speed of their U-turn, Netflix must have lost subscribers. “It’s unlikely that Netflix decided to withdraw its new pricing policy just because of the negative reviews on social networks,” Ezequiel Rivero, a professor at the University of Buenos Aires, who researches the digital transformation of the film and television industries, told Rest of World. “I estimate that, specifically, they lost subscribers since the first announcement.”
He added that even though Netflix has not yet announced what the prices for “adding a member” in each country will be, the results will be the same: increased costs for users.
Netflix will now need to avoid the mistakes it made during its password-crackdown trials. This included a staggered rollout in Peru that left subscribers paying different prices for the same service and was flagged by regulators as a potential consumer protection violation.
“Ultimately, as Netflix rolls out its new policy, the key is to be clear and transparent on what the policy means — and what it doesn’t,” Sarah Lee, a research analyst at Parks Associates, a consultancy specialized in consumer technology products, told Rest of World.
As competitors such as HBO Max and Disney+ continue to chip away at Netflix’s market share, some observers question whether Netflix’s experimentations in Latin America may have alienated customers.
“I know that Netflix has become a beast too big to manage but the focus to attract new subscribers should be on content and IP,” Joaquín Serpe, a member of the Global Emergent Media Lab, told Rest of World. “Producing local quality content is going to have a far more positive effect than trying to control users.”