The gun is aimed at one’s own people: Netflix, which is constantly falling, has taken out the last big killer

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This is a story of 100 million people plucking the wool and plucking the sheep out of their eyes. But is it really such a story?

This week, streaming giant Netflix enacted an “overturned” decision to crack down on account sharing. The muzzle is aimed at its users, the users who lick the wool. According to Netflix’s own data, this will involve about 100 million people around the world.

In fact, this is a common problem encountered by streaming media at present. In the past, although Netflix clearly stipulated that users can only share accounts with family members, its various pricing strategies seem to encourage users to share accounts.

In Netflix’s pricing strategy, $9.9 for ordinary users is limited to one user. The standard user price is $15.49, but two users can use it together. The top-level account is $19.99 and can be used by 4 users. It is worth noting that in addition to the difference in the number of people who can share accounts, user rights will also increase with the price. Therefore, on a global scale, many users will choose to make orders, choose the most expensive 19.99 US dollar stall, and share with four people, which not only shares the highest rights, such as ultra-high-definition video and other functions, but also can save everyone’s monthly The fee is reduced to half that of ordinary users.

In fact, Netflix has always turned a blind eye to this, and even posted this on social media a few years ago: Love is sharing passwords.

Now, however, Netflix has decided to redefine love.

In this month’s latest earnings report, Netflix’s subscriber growth slowed significantly, showing a record low in recent years. The company blamed two reasons for the slump – the huge competition from streaming media such as Disney and Apple+, and more importantly, the illegal sharing of accounts by users. In the financial report, Netflix pointed out that about 100 million users worldwide are “violating” shared accounts, of which about 30 million users are in the United States and Canada. These slowed the growth of Netflix’s new subscribers, and also made Netflix’s earnings numbers so ugly that the stock price suffered heavy losses.

“Strike Hard” Begins

For cracking down on the illegal operation of such shared accounts, Netflix’s punch is also quite fast.

This week, Netflix has a general idea – it will not force the closure of these illegal shared user accounts, but will make each parent account owner pay Netflix a small additional fee when sharing the account with other users.

Of course that doesn’t mean that real family members can’t share accounts for free. In Netflix’s move, only those users who don’t live at the primary account address will be charged extra. This can not only increase the number of paying users of Netflix and give an explanation to the capital market, but also increase the income of the company and solve the urgent need of lack of money.

Netflix began experimenting with the scheme in several countries, sending warnings to master account owners who share passwords. Currently in Peru, Costa Rica and Chile, three American countries, Netflix is ​​already testing a levy for shared accounts across home addresses. It charges $2.13 for each sub-account with different addresses in Peru. This fee is $2.99 ​​in Costa Rica and about $2.92 in Chile.

Netflix CEO Greg Peters did not disclose how much revenue such a measure would bring to the company on the earnings call, but he said it would take about a year for people to accept it and complete its global pricing strategy.

Somewhat worse, a survey by research firm Time2Play found that 80% of US users who “violate” a shared account would choose not to continue using Netflix if their passwords could not be shared, and they wouldn’t be willing to pay for it themselves Open your own new account. However, the survey didn’t ask if parent account owners would be willing to pay more to “share” their accounts with friends.

Greg said that this price increase strategy will gradually be implemented in the global market, and the United States will be no exception.

The big knife of throttling is also swung to employees

Netflix’s crazy decline in market value is obviously not something that can be solved by preventing 100 million users worldwide. At present, its stock price has not just fallen out of the epidemic dividend, but has directly returned to the lowest point since 2018. The high point of the stock price of $690 per share was just over four months ago, and now, the company’s market value has evaporated by 72%.

After the earnings tumble, Netflix slashed its employees with another big knife. Many former and current employees have anonymously told Bloomberg that morale among their internal employees is low, and that a wave of departures has occurred. Previously, however, Netflix employees, unlike other companies, had the option to pay the entire pay package in cash. In other words, the collapse of the stock price will not directly reduce the salary of all employees by a large margin.

In fact, Netflix has never been a stingy company when it comes to salaries. Once, this company used to poach people in Silicon Valley and Hollywood at a price that was twice the market price. The founder of the company, Reed Hastings, even wrote a book “Rules without Rules” to promote his own ideas of governing the company and managing talents. Flatness has always been a hallmark of the Netflix workplace.

From 2013 to the present, the number of Netflix employees has grown from 2,000 to more than 11,000. At present, Netflix has entered a mode of tightening its clothes and cutting costs. In this model, Netflix has also moved its own mind about the compensation system for employees. In the past, Netflix employees were mostly at the same level. Now, they decided to break the original flat system, divide all employees into different tiers, and pay salaries according to the tier.

In the eyes of employees, the purpose behind it is also clear – to reduce labor costs across the company by paying lower salaries to lower-level employees. Meanwhile, Netflix has said it will scrutinize the company’s spending more closely, according to Bloomberg.

Although employees have their own interpretations, the company said it is doing this to better help employees complete their career growth.

fatal injury

Because of the earliest earnings report in each quarter, U.S. technology stock investors almost take Netflix’s earnings report and post-earnings stock price fluctuations as a bellwether for U.S. technology stocks. But unfortunately, Netflix has crashed several times in a row, and even sent technology stocks collectively down for a time.

The reason for Netflix’s collapse this time is also clear – the company’s subscriber growth has fallen for the first time. In the report, Netflix lost 200,000 paid subscribers in the quarter, far less than the 2.5 million increase expected by the market. With such ugly data, the stock price crashed by 20% on that day. As of today, the stock price has fallen by more than 44% due to this financial report, which is close to halving.

Netflix said the drop in subscribers was also related to the loss of roughly 700,000 subscribers due to the discontinuation of its service in Russia. Without this contingency, the growth in paying users this quarter would have been about 500,000, which is only a fraction of the expected growth.

There was also a fatal statement at the earnings conference that brought the stock price crash. Netflix expects that this loss of subscribers is not a one-off event and will likely continue to happen, shedding about 2 million paid subscribers in the second quarter of this year.

The collapse in share prices brought on by slowing user growth has precedents—both Robinhood and Pinterest are facing similar problems. In this market environment where stock prices continue to collapse, and the collapse can continue to collapse endlessly, there may not be much time left for Netflix to adjust.

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