The good results that Netflix is obtaining in progressively converting people who watch its content with third-party accounts to paying have created a trend. If in August last year Disney announced that it would do the same in 2024, now it is Max that is preparing to apply restrictions in the coming months with a view to a wider rollout in 2025. This was confirmed by Warner Bros Discovery (WBD) streaming and gaming CEO JB Perrette during a conference in San Francisco.
The executive sees in this strategy a “significant opportunity in relation to the scale of our business”, which closed last year with profits of 103 million dollars that have mainly come from continued adjustments. For the streaming division, WBD expects modest losses in the first half of the year and profitability in the second half, with the goal of achieving operating profits of $1 billion by 2025.
The launch of the initiative against shared accounts will coincide in time with Max’s international expansion, which in the next 18 months will reach Latin America and relevant markets in other regions such as France and Australia. And it remains to be seen whether it will boost the acceptance of its ad-supported version, whose growing revenues in the US were decisive in helping that segment of the company put behind it a succession of quarters in the red.
The combination of both factors explains Netflix’s good momentum, where the arrival of new users as a result of blocking their unpaid consumption is expected to be constant for some time. To encourage those sign-ups to go to the ad-supported mode it is eliminating the cheaper ad-free plan in some markets, and that creates a significant price difference between the two experiences. So the more cost-sensitive customers, who therefore did not pay for the service in the first instance, are helping to increase the company’s advertising scale.
In Disney’s case, the anticipated move is that from the summer it will start notifying users of its most important streaming platform that they should get their own account if it detects that they are using a third party’s account. There is no concrete estimate of how many people are in that situation but the move could be crucial for that division to turn a profit in the third quarter, as the company plans to do. In the final stretch of last year it already managed to reduce the red numbers to one-fifth.
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