Vulture explains the new plan:
Sharing is caring, and all the caring has resulted in an estimated 10 million people enjoying Netflix free of charge, piggybacking on the accounts of family members, friends, and foes. Now the streaming service has instated a family plan, which for $11.99 a month allows four users to stream at once on four individual devices. The standard $7.99/month account is said to limit streaming to just two devices at once. “Take a moment to imagine a family of four all sitting in different rooms of the house watching different shows on Netflix at the same time. A sad picture, but not necessarily a far-fetched one,” HuffPo writes. “However, what’s more likely is that Netflix is trying to squeeze a few more dollars out of subscribers who all know that they aren’t supposed to be sharing their accounts with so many people.”
The interesting question for me is whether Netflix will start enforcing restrictions on password-sharing at some point, and what those enforcement mechanisms would look like. If you have dramatically different schedules from someone you’re sharing a password with—say, someone overseas, or in a different time zone—upgrading to the family plan doesn’t make much sense because you’re unlikely to both be streaming content at once, and thus unlikely to come into any sort of conflict about who gets to use the password when. So if the prospect of having your streaming shut off when someone else hops on your account isn’t the incentive to force people to pony up for more bandwidth, what would that enforcement look like?
One way to go might be for Netflix to offer an iTunes-like authorization system that gets each username a set number of devices in each category they can register, and then requires them to ante up if they want to get more devices on the account, perhaps in tiers like the ones offered by Verizon’s Share Everything plans. That would preserve the interoperability of the service, which is one of the key factors in its success, while also letting people pay in a realistic way based on their own usage and the usage of people associated with their account.
And it might also prepare users for increases in fees. Netflix got in the streaming video door extremely early, and had a first-mover advantage when it came to negotiating deals for content. That advantage doesn’t exist anymore. The deals Netflix signs going forward will be more expensive if they’re exclusive, or they won’t be exclusive, lowering the value of the content. And if Netflix wants to produce its own original content, it’s going to be quite expensive. While the company has said that originals like Hemlock Grove and House of Cards are quite popular, they aren’t really quantifying what “quite popular means.” In any case, the measure that counts is whether people subscribe to Netflix specifically for that content at numbers and price levels that make the continued production of it sustainable. This business model is far from settled. But how it shakes out will be indicative.