Capital Calls: Netflix freeloaders

Paramount Global

16/03/2021 14:53

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are their own.)
    NEW YORK, March 16 (Reuters Breakingviews) - Concise
insights on global finance in the Covid-19 era.
 
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PLOT TWIST. Netflix  NFLX.O  is testing a clampdown on users who
share passwords  urn:newsml:reuters.com:*:nL4N2L954K. It sounds like an act of
self-defence. After all, around 14% of American viewers aren’t
paying https://www.vox.com/2019/4/8/18300256/netflix-password-sharing-14-percent-survey-content-experience-moffettnathanson.
 But it might also be a clever way to raise the heat on other
streaming services like Disney+ and Paramount+.
    Think about what happens to a freeloading user who is asked
to pony up $8.99 for the basic Netflix package. If they
subscribe, Netflix gets extra revenue and grows its 204
million-strong customer base – and the user has a little bit
less disposable income to spend on a rival. On the other hand,
if the user doesn’t take the bait, and goes with a different
service or nothing at all, Netflix is no worse off – because the
user wasn’t paying anyway.
    Of course, one person can have several streaming products.
The soaring market values of Walt Disney  DIS.N  and Paramount+
owner ViacomCBS  VIACA.O  show investors are counting on it
 urn:newsml:reuters.com:*:nL1N2KU2DB. But there’s only so much money to go around. By
tapping viewers for cash now, Netflix can twist the knife on
rivals, with nothing to lose itself. (By John Foley)
    
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 (Editing by Jennifer Saba and Oliver Taslic)