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The extra fee Canadians pay Netflix for the privilege of sharing passwords with others in multiple locations was supposed to roll out to US customers a few months ago. However, despite saying the surcharge was a “positive” in Canada, the streaming giant delayed charging Americans the same price as Canadians for several months.
The results include Netflix reporting that “revenue growth has accelerated” in Canada and that it has more subscribers in this country than before it started charging extra for password sharing.
So even though Netflix sees financial benefits in Canada from charging more for password sharing, and told investors that the Canadian market is a “reliable predictor” of the US market, it still chose to delay charging American consumers for another month.
people [in Canada] moved through it. Whereas in the United States, they would expect a more vitriolic reaction.– Vincent Georgie, University of Windsor
Experts such as John Buffone, vice president and media industry analyst at market research firm Circana, told CBC News that Netflix may be reluctant to make changes in a large part of the business.
“If you are a company that tests something that you know will not always be met with many smiley faces from viewers? You will not do it in your biggest market, the United States,” said Buffone, speaking from Oceanside, New York.
What’s good for Netflix could anger Americans
According to Buffone, Netflix as a company will greatly benefit from the price increase for many of its customers.
“If they successfully transition to what they call a paid password sharing model, this is the most potential revenue gain for the company,” he said.
According to Netflix, more Canadian customers ended up with the company months after the increase in fees.
It now plans to start charging the American equivalent before July, after the original plan to start charging the US in March.
But Buffone points out American consumers may not react the way Canadian consumers do.
“One step here could cause the stock price to drop,” he said, comparing the rapid changes made today when Netflix – unpopular – tried to split its DVD-by-mail business into a separate service from its internet-based service in 2011.
At the time, customers complained and the company’s stock fell by more than half.
The Canadian market is ‘less important,’ says a film business expert
At least one Canadian film industry watcher said he’s not surprised Netflix is willing to try to charge more Canadians, but still fears the American backlash.
“I mean, we are less than 10 percent of the US market so they can take some carelessness with the Canadian market itself because it is less important,” said Vincent Georgie, assistant professor of marketing with the Odette School of Business at the University. of Windsor.
According to Georgie, who is also the executive director of the Windsor International Film Festival, Netflix is part of the entire film industry and ecosystem that is risk-free. Testing Canadians at a higher cost is a good way to see what happens before trying in a larger market.
“In Canada, I mean, it’s a rather muted reaction… but you know, people are over it. Whereas in the United States, they would expect a more vitriolic reaction, which could surprise the market,” said Georgie.
Competitors Netflix could follow suit
For Canadian customers such as Dan Student, the additional charges caused them to cancel their services.
The family consists of five children, who are cared for regularly at the grandparents’ home in addition to the Student’s home, and the family’s Netflix account is used in both places for continuity of childcare.
“I dropped it off at my dad’s house, went in, and the kids were watching there,” said Student, who lives in Grande Prairie, Alta.
The fact that the Netflix account starts to cost an additional eight dollars per month, compared to customers who live in, for example, Grand Prairie, Texas, ma Student way wrong.
“We beat around the bush before, but I canceled,” he said, pointing out that his family now has Amazon Prime and Crave as an alternative.
However, these savings may be short-lived. Vincent Georgie said he expects Netflix’s competitors in the United States and Canada to introduce similar surcharges in the future.
“He wants to see how it goes,” said Georgie.
“They want Netflix to take this burden and the consumer burden around them.”
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