How does this affect college students? – NBC Chicago

• As Netflix moves closer to issuing password-sharing guidelines in the United States, college students are bracing for changes in their streaming habits.
• Netflix introduced password-sharing guidelines for users in Canada, New Zealand, Portugal and Spain in February. But he did not say how and exactly when the pressure on the US would occur.
• Additional changes to password sharing have created uncertainty for students who don’t have disposable income or want to spend on their own subscription.

As Netflix moves closer to implementing password-sharing guidelines in the United States, college students who use accounts associated with family or friends are preparing to change their streaming habits.

The company said it expects new password guidelines in the coming months, but did not provide details on what they might look like. In February, Netflix established password-sharing protocols for users in Canada, New Zealand, Portugal and Spain that require users to set up a “primary location” for their Netflix accounts and “add additional monthly fees for secondary accounts outside the home.” “. .”

While Netflix U.S. has not said whether the plan will ultimately resemble previous changes, some fear that the crackdown on password sharing could disrupt the flow of freshmen and burden low-income students and their families. .

Sam Figiel, a sophomore at Mercer University in Georgia, says access to Netflix is ​​required for many of his peers’ courses. Figiel, who uses her mother’s account, says almost everyone she knows at school watches Netflix, though she and some of her friends may end up leaving the platform if the password sharing ends.

“Without Netflix, I would have to find a way to pay for the courses, but the only way to pay is to go to another streaming platform,” Figiel said. “My parents are paying for three kids in college. All of them have their own costs. They pay all our car payments, phone bills, so they don’t have a lot of money to spend.”

Netflix has long put subscribers first. However, additional changes to password sharing have created uncertainty for students who don’t have or want to spend disposable income for their subscriptions.

Netflix spokeswoman Kumiko Hidaka referred CNBC to previous announcements about the company’s previous moves, but declined to comment further. Chengi Long, the company’s director of product innovation, said in February that more than 100 million households had shared accounts, about 43% of the company’s 231 million paid global memberships this month.

According to a 2022 survey by Parks Associates, 40% of US households share or use shared passwords, up from 27% in 2019. 18- to 34-year-olds, who make up 30% of all Netflix users, trade in passwords more than older viewers. Netflix reported 74.3 million paid streaming subscribers in the United States and Canada in the fourth quarter.

Vrisha Sukraj, a student at the University of Maryland who watches Netflix from her parents’ account, says it’s the go-to streaming platform for everyone she knows. But he worries that forward-looking policies could alienate some younger customers.

Sookraj suggested that a student plan, similar to the low-cost subscription plans offered by Spotify, Hulu and Amazon Prime, would allow more flexibility to accommodate different income levels. Still, he doesn’t know that he will pay the monthly fee himself.

“Maybe it’s not that expensive, but at the end of the day, saving money is saving money,” Sukraj said.

Netflix executives acknowledged that while the change should help the company’s bottom line, it may not be popular with users. Co-CEO Ted Sarandos said at a conference in December that the pay-sharing model “looks like how we’re going to deal with price increases,” adding that it would be “really positive for revenue” and “expanding the market.”

But he added: “Make no mistake, I don’t think consumers will love it out of the box.”

So far, the fight against password sharing

Last month, Netflix announced that users in Canada, New Zealand, Portugal and Spain could create up to two “secondary accounts” for a monthly fee for users who don’t live in the main location: CA$7.99 in Canada, NZ$7.99 in New Zealand, NZ$3.99 in Portugal euros, 5.99 euros in Spain.

The company didn’t share what the U.S. pricing model would look like — if it follows suit.

In the countries mentioned above, users can also create their own accounts for non-household members by copying their profiles to a new account, which will retain personalized offers and viewing history from the original account. .

The guidelines come after a trial period that began in May in Chile, Peru and Costa Rica.

The company is working to support “consumer choice and its long history of customer focus,” Netflix CEO Greg Peters said in October when he became co-CEO in January. last.

However, he said, the company must balance those goals with the need to get “paid.”

For Netflix, the math is growing subscribers against monthly payments — and it’s not the first time. In November, Netflix launched a new tier called “Basic with Ads” for $6.99 a month – an offer to attract more viewers at a lower price.

Some Wall Street analysts believe there could be an immediate hiccup in the U.S. after password breaches led to earnings growth in the second quarter.

Wells Fargo analysts believe password sharing could be a bigger near-term revenue catalyst than implementing an ad-supported layer.

In a January note, Macquarie analyst Tim Nollen predicted that average revenue per user could increase if enough idle users were kicked off the platform and then joined as paid subscribers. or added as a secondary account. He told CNBC this week that given the size of Netflix’s content base, he expects many users who left the service to return soon, but he predicted an initial turnover in the next quarter.

“There are many, many, many American users who don’t pay for this, so I think they’re very sensitive to the reactions they experience when they do,” Nollen said. “It’s going to take a while to get to the point where they really know what they’re doing and can actually make money from it.”

If Netflix charges extra for sub-accounts in the United States, those extra costs could be difficult for Tuan Tran, a senior at Duke University in Vietnam, who shares his account with his sister and partner. While he acknowledges that many Duke students are financially able to afford the additional costs, he said that making significant changes to the subscription structure would make him think twice.

“If you can share an account with people you like in different places… and then you change it, and then you pay more if people want more profiles or screens, then it’s good against a lot of things. Your site has attracted a lot of viewers,” said Tran.

stay or go

Although subscription costs can be expensive for borrowers, some college students find Netflix too great to pass up.

Elizabeth Danaher, a sophomore at the University of Missouri-Columbia majoring in communications and filmmaking, said Netflix has allowed her to watch movies with her family when she’s not in Illinois. at school, especially with his father, who started a League of His Own. and Home Alone 2. He said it would “definitely hurt” if the cost structure prevented him from accessing Netflix, which he considers an important “source of information” but which he and many of his peers spend a few dollars a month.

“I think at the end of the day, Netflix is ​​probably a necessity for me,” Danaher said.

About 66% of households nationwide have Netflix, according to a yet-to-be-released study by Leichtman Research Group. According to an online survey of 3,500 adults in the United States, about 14% of all households with Netflix borrow it from someone else and don’t pay. This rises to 21% for consumers aged 18-34.

“Sharing helped them grow the business, but now it’s limiting their potential subscriber growth,” said president and chief analyst Bruce Leichtman, adding that Netflix lost nearly a million subscribers in the US and Canada last year.

Leichtman estimates that sub-accounts can cost more than $3 each, and according to survey data, about half of shareholders and borrowers say they would pay fees at that rate. About 10% in both categories said they would pay the extra fees, but also try to lower their bills.

About a quarter of respondents to the survey, who share their login credentials, say they’ll ditch Netflix after the policy change requiring an extra monthly fee for a subaccount, compared to a third of borrowers. Although Leichtman said that’s unlikely here, people are willing to pay a few extra dollars a month under the new policy.

Aravind Kalatil, a senior at the University of Missouri-Columbia, said a stranger had accessed the smart TV in his apartment and was using his Netflix account. Calatil and his household don’t know who owns or pays for the account, and are ready to log in without warning if password restrictions come into effect.

“At the end of the day, it probably won’t be a big deal for us because all of our family have Netflix accounts and we make it work, but it just adds to the hassle and annoyances. Ultimately, it’s in addition to what the streaming services spend depending on the volume,” Calatil said.