Is Sharing Accounts a Wise Business Strategy in Entertainment Subscription Services?
The practice of sharing accounts, such as with services like Netflix and Hulu, has long been a topic of discussion among consumers and business strategists. While some argue that it presents lost revenue opportunities, others believe it fosters greater engagement and generates additional revenues. This article explores the effectiveness of sharing accounts as a business strategy for entertainment subscription services.
The Business Strategy of Sharing Accounts
Entertainment subscription services frequently employ various pricing strategies to attract and retain customers. One such strategy is offering volume discounts. For instance, a family account allows more simultaneous streams compared to a single user account. This encourages larger households to subscribe to a family plan rather than individual accounts, thus maximizing their usage and revenue potential.
A couple might also share an account. This can lead to increased exposure to content, particularly for partners who might not have discovered certain titles otherwise. When their relationship ends, there is a higher chance of a breakup leading to a need for a new subscription, further increasing the subscription base for the service. This exemplifies how shared accounts can drive greater engagement and encourage additional revenue streams.
Companies' Perspective: Encouraging Account Sharing
Some industry professionals and analyses suggest that companies like Netflix and Hulu prefer to have accounts shared amongst multiple users rather than those users cancelling an account altogether. This is because a shared account benefits the company more than a discontinued subscription. If an account is shared among five individuals, it is a better outcome for the company than none of those individuals paying for an account.
Some experts also argue that preventing account cancellation is more favorable than losing a customer entirely, even if it means the company earns less revenue from each individual. Thus, allowing account sharing can be seen as a strategic move to ensure continuous customer engagement and subscription retention.
User Perspective: Benefits of Sharing Accounts
From the user perspective, sharing an account can also have several advantages. Take, for example, a shared Netflix account: if a user has friends or family members also subscribed, they might feel social pressure to continue the subscription even if they have watched all available seasons. The prospect of missing out on content or the social pressure to maintain a shared commitment can keep the subscription active.
Moreover, the initial low cost of a shared account can be a significant factor in maintaining the subscription. When a price, such as for a family plan, is very competitive compared to individual accounts, it can be a compelling reason to continue using the service.
Conclusion
In conclusion, the practice of sharing accounts in entertainment subscription services can be a double-edged sword. While it may lead to lost revenue per individual user, it can also drive greater overall engagement and subscription retention. Companies may see this strategy as a gold mine for increasing the number of subscribers, fostering a sense of community, and encouraging continued engagement.
Whether sharing accounts works to a service's advantage is open to debate. However, for companies like Netflix and Hulu, the strategy seems to align with their goals of maximizing reach, fostering long-term customer relationships, and ensuring continuous revenue streams.