With Netflix now cracking down on account sharing, Omdia’s Jun Wen Woo explores what the impact of these extra charges will be for the streamer in South Korea.
Starting November 2023, Netflix in South Korea began charging an additional KRW5,000 ($3.85) per member for account sharing with those who do not live in the same household. This is applicable to both standard and premium subscriptions.
The charges are lower than the US where an extra member costs $7.99, or approximately half the price of its standard tier. Meanwhile, in South Korea the cost is around one third of its standard tier, KRW13500 ($10.36).Impact assessment and outlook
The Glory streamer will have approximately 6.5 million paid subscribers in South Korea by the end of 2023. As the market becomes saturated, Netflix subscription growth is expected to slow down in coming years.
The global streaming service implemented account sharing fees in an effort to increase its revenue from South Korean households that currently share passwords.
This strategy is likely to lead to increased subscriber churn in the short term since subscribers with budget concerns will:
– Downgrade to a lower tier because they can no longer share accounts
– Unsubscribe and only subscribe again when there is content of interest
– Subscribe to a cheaper service
However, charging for account sharing should bring long-term benefits and help to improve revenue for Netflix.
As content production costs continue to increase, it is important for streaming services to expand their revenue stream to improve ARPU and sustain the business in the long run. Disney+ also recently increased its pricing in September 2023, while local service TVing will also increase its subscription fee in December 2023 and will introduce an ad-supported tier in 2024.
The excerpt above comes from Omdia’s ‘TV & Video Industry Developments Impact Brief – November 2023’, by Jun Wen Woo, senior analyst for TV & online video, which can be read in full here (with a subscription). Omdia and TBI are both part of Informa Tech.