Netflix – Did they listen to their Marketing Director?

Last week Netflix released into the public domain, deliberately or accidently, their aggressive plans to end password sharing between households. Their aim is to boost flagging income by forcing people to get their own subscriptions. The plans included making users log in every month and attaching the account to the Wi-Fi, so that only those on the same Wi-Fi can access the account. Netflix also said that customers who shared their passwords with friends were committing a crime.

I don’t think it needs a PR professional to explain that telling your customers that they’re criminals, for doing something that you used to actively encourage, is a bad move. And you probably don’t need a UX professional to explain that forcing customers to log onto the account on a TV every month will create a huge barrier to use. The customer service team will also know that customers watch Netflix at different locations (many while travelling).

In my 40-year career I’ve seen what happens when a Finance Director refuses to listen to the Marketing Director. I don’t know whether or not that’s happened here, but it has all the hallmarks of that being the issue.  Netflix has clearly assumed conversion rates, based on viewing rates, without considering the human factor.

Netflix might have got away with their aggressive stance if they’d been in a monopoly position, but they’re not, they’re now competing with many other streaming services. What should they have done to increase revenue while not alienating their customers?

In a competitive marketplace, where customers have an increasing number of options, it is always better to use the carrot than the stick. Instead of punishing their customers, by forcing them to jump through hoops and calling them rude names, they should have looked at innovative ways to make password sharing less attractive for everyone involved.

You could, for example, use marketing in a light-hearted way to make subscribers consider how they use the power of their Netflix subscription. E.g. You’ve split up with your boyfriend, do you cut his Netflix access now or wait until you can see he’s about to watch the finale of his favourite show? Netflix could use TikTok and other social media channels to actively encourage people to share their funny anecdotes on social media; so that soon anyone accessing someone else’s subscription lived in fear that the account holder will use that power over them at a bad time.

I would also introduce new reporting to proactively give the account holder detailed information on how the subscription is being used. i.e. Each week send an e-mail (FitBit style) to the account holder listing what programmes each person has watched and for how many hours. I appreciate you can already see the programmes, if you check, but who checks? The aim would be to make young adults crave the privacy of having their own account away from their parent’s prying eyes as soon as they can. And who wants their friends to know that they watched Mary Poppins 20 times last week following a breakup?

There are many other ways of achieving the same objective. Over time, through a series of gentle nudges, you bring customers around to the idea that it is worthwhile having their own subscription.

It will be interesting to see how Netflix moves on from this crisis.