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Netflix Mulls Multiuser Streaming Accounts

19 Apr, 2011 By: Erik Gruenwedel

With U.S. household broadband penetration topping 70 million households, Netflix is considering allowing users to access rental streams on separate devices billed through one membership.

The concept would parallel the Los Gatos, Calif.-based online disc rental pioneer’s long-time strategy of allowing more than one disc out at a time to a singular membership. The company said the scope of a $68 billion annual subscription-based home entertainment market (including cable and satellite) affords it opportunities for growth.

“As streaming has become central to our business, we believe there may be an opportunity to change our focus from a household relationship to an individual relationship, since streaming is viewed on personal devices, such as phones, tablets, and laptops, as well as on shared large screen televisions,” Netflix said in an updated investor FAQ link.

Netflix said it could allow an account to have concurrent streams playable on different devices, unlike the current $7.99 plan that allows one stream at a time. Or it could reduce the monthly fee to encourage multiple accounts per households.

“In either case, our long-term goal is to evolve the Netflix service so that it feels more natural to have a personal account,” the company said.

Separately, Eric Wold, director of research at Merriman Capital in San Francisco, said recent concern over Netflix’s burgeoning streaming license agreements is misplaced. He said the inclusion of Amazon Video, YouTube and Hulu Plus as streaming platforms should entice studios to diversify distribution; thereby reduce individual license fee agreements.

“This is likely to reduce the average cost of content, not increase it (exclusivity has a premium),” Wold wrote in an April 19 note. “At this point, we do not believe exclusivity is important to Netflix given the subscriber base and content selection lead over others … with management gladly sacrificing some exclusivity for reduced content cost.”

Finally, Wold wasn’t sure if Netflix would begin offering third-party ads on its website — a strategy the site heretofore has avoided. He cited the possibility after discovering it is promoting the physical sellthrough of Little Fockers, which isn’t available for rent at Netflix until May 2.

“We would believe Netflix is either sharing in the revenues from the DVD sales or has sold that space as advertising to the studio,” he wrote.

About the Author: Erik Gruenwedel

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