Netflix faces potential customer churn in the UK

Netflix's recent crackdown on password sharing is causing concern among its UK subscribers, with a significant portion considering canceling their subscriptions or downgrading their packages. Broadband Genie, a comparison site, reports that 27 percent of UK subscribers are contemplating leaving the streaming service or switching to a more affordable membership tier. Approximately 2.5 million subscribers are eyeing the exit door since the controversial change was announced, while 1.5 million are considering downgrading their plans.

A quarter of Netflix viewers in the UK, who were previously using someone else's account, feel betrayed by the company's decision. Among them, the younger demographic, particularly those aged 16-24 who are the most active Netflix users, express the highest level of disappointment at 30 percent.

Moreover, 27 percent of Netflix viewers who were accessing the platform for free claim they cannot afford to pay for their own subscription. Nearly 39 percent of them admit they will attempt to find ways to bypass the ban, including using virtual private networks (VPNs) to impersonate other account holders or resorting to pirate websites.

Netflix should be concerned as more than half of UK users state that the new restrictions on password sharing will directly impact their plans. This comes at a time when the streaming platform is engaged in fierce competition with rivals like Disney+ and Amazon Prime. Additionally, 27 percent of British consumers perceive cost as the main disadvantage of subscribing to multiple streaming services, posing a further challenge for Netflix.

Despite the challenging outlook, Netflix has observed a surge in new subscriptions in the United States after tightening its rules. In the UK, 35 percent of non-account holders express a likelihood of paying for a Netflix subscription, equating to approximately 1.3 million potential new customers. This could generate an annual revenue increase of £140 million for the company. However, the company's cheapest package in the UK (£6.99 per month) may be at risk, as Netflix recently eliminated its Basic subscription tier in Canada.

Additionally, 15 percent of current subscribers claim they are willing to pay an extra £4.99 charge to continue sharing their account with others, contributing another £134 million to Netflix's revenue.

The proposed government regulations aimed at protecting consumers from subscription traps will also impact streaming platforms. Netflix and similar services may be required to notify account holders every six months about ongoing subscriptions and offer a two-week cooling-off period for canceling new streaming packages.

Broadband Genie advises all consumers to conduct a "streaming stocktake" of their subscriptions, explore opportunities for customization based on their usage, take advantage of free trials, and bundle streaming services with other pay-TV options to save costs.

Alex Tofts, a broadband expert at Broadband Genie, suggests that Netflix has taken a calculated risk with its long-term future by targeting viewers who have been streaming its content for free. Converting a significant portion of this group into paying customers would bolster the company's financial performance, but the strategy has also unsettled valuable customers. Spain has already witnessed a decline in subscriber numbers following similar rule changes, while the United States has experienced an increase. Competitors in the streaming industry will be closely observing Netflix's approach, as demonstrated by Disney+'s recent announcement of an ad-supported tier.

To Netflix viewers who have lost access to a friend or family member's account, Tofts recommends trying free trials of alternative services like Amazon Prime Video or Apple TV+ while considering viewing options.

For subscribers of any streaming package, conducting a stocktake to avoid overpaying for content or subscribing to unused platforms is advised. Bundling streaming services with broadband, TV, and mobile packages may also provide cost savings compared to separate subscriptions.