New River Valley Times

Netflix Cracks Down on Password Sharing: What It Means and How It Can Benefit Users

News leaked last week of Netflix’s new password rules. The company could require all accounts and devices used for streaming to be linked to the same Wi-Fi network. So if you’re using the account of a friend or family member who lives in a different home – either down the road or a few states away – you may soon be blocked from logging into Netflix.The potential change – which Netflix says now only applies to account holders in Chile, Costa Rica and Peru – seems inevitable for users in North America, where Forbes says password sharing happens in more than 30 million households.To get a gauge of how this came to be, and what it might signal for the future of subscription video-on-demand services, we caught up with Anthony Palomba, an assistant professor at the University of Virginia’s Darden School of Business.Fascinated by media, entertainment and advertising firms, Palomba is working on several research papers that analyze the dynamics of the subscription video-on-demand marketplace.RELATED STORYQ&A: As Rivers Recover From Last Year’s Drought, Winter May Pose Untold Threats

Q. What is the main reason why Netflix is cracking down on password sharing?A. A lot of people have stated that they don’t want to be followed by advertisers, though many surrender private information for free access to apps. We’re moving toward a digital cookie-less future, as Google now estimates it will eliminate third-party cookies from its Chrome browser sometime in 2024.So if that’s the case, there’s going to be even more pressure to start measuring audiences well. And, if Netflix is on the other side of what Apple started with shaking up the digital advertising industry to give people choice over how they are tracked and to move away from cookies, this is the time to start refining audience measurements and tracking systems. This limiting Netflix accounts to single households is a way to do that.Q. What was the tipping point that led to this change?A. I think the tipping point came down to when the market was saturated with subscribers with churn rates up to 4% or 6% a month. You’re talking about 30 million subscribers over the course of a quarter that sometimes will change and cancel across services.So, if you have that kind of churn rate going on quarter-to-quarter, you need to start thinking about how you will measure audiences to streamline content production that satisfies your audiences. Because now everybody’s kind of had a sample of everything, and you’ve created a situation in which people are used to binging video series or watching incredible content. This ratchets up their expectations for the next powerful or incredible series or content.Since content is coming out at such rapid speed, people are just jumping to the next thing. Like, “Oh, ‘Euphoria’ is up. I’ll cancel Netflix and subscribe to HBO for a month.” When that happens, you now have incomplete and inchoate data sets. This can reduce your ability as an [subscription video-on-demand] executive to figure out, to some extent, what some people want.

Q. Why is it important for Netflix to have these data sets?A. Possessing and creating pipelines for good data is a really big deal. I can’t emphasize that enough. It really does come down to the quality of your secured data, how you are piping data, and how you are managing model decay over time. If people are running around and jumping from one platform to another, you really can’t learn much about those people.

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