This week, Netflix announced it will start checking with inactive customers if they want to continue using their subscription. Though Netflix has long been considered a streaming leader, that title has been in jeopardy in recent years. Thanks to longtime services like Hulu and Amazon Prime Video, the competition to woo Hollywood creatives has been tight for awhile now. However, within just the last year, the market has become more saturated than ever before. Now, Netflix is not only competing with established streaming services, but also Apple TV+, Disney+, and the upcoming platforms HBO Max and Peacock.
Luckily, Netflix is still succeeding at landing massive deals with Hollywood's biggest names, which in turn helps the streamer hang onto subscribers. Ryan Murphy (American Horror Story) and Shonda Rhimes (Grey's Anatomy) both have multi-year agreements with the streamer, as do several others. Netflix has also made a push toward Oscar-worthy movies in the last few years, including 2019's The Irishman. These things combined have helped the platform stay relevant in an increasingly competitive streaming world.
In another positive sign for Netflix, per CNBC, the streamer revealed this week it will start cancelling inactive subscriptions. However, customers will first be asked if they want to continue using the service. These messages will begin going out this week. According to Netflix, these customers make up a very small percentage of those subscribed - less than half of one percent. Director of product innovation, Eddy Wu, explained what constitutes an inactive subscription:
We’re asking everyone who has not watched anything on Netflix for a year since they joined to confirm they want to keep their membership. And we’ll do the same for anyone who has stopped watching for more than two years.
This is a somewhat surprising decision by Netflix, again, considering how saturated the streaming market currently is. However, due to the coronavirus, this is a big time for streaming services, as entertainment fans are stuck at home looking for a distraction. With HBO Max set to launch next week and NBCUniversal's Peacock fully launching this July, it will be interesting to see how customers react. One new streaming service, Quibi, actually suffered from the pandemic, at least according to its founder, Jeffrey Katzenberg.
It remains to be seen if other streaming platforms follow Netflix's lead. It seems more likely that veteran services like Amazon Prime Video and Hulu would do this, as newer streaming services haven't been around long enough to even have inactive subscribers. It would also depend on the percentage of customers who have inactive accounts. There's a chance Hulu and Amazon Prime Video have larger numbers than Netflix, which would make it more of a risk. Disney, which owns both Hulu and Disney+, would have to be extremely careful with this sort of decision, as the closure of Disney parks and cruise lines has the company more reliant on streaming than ever before. As the notifications for inactive Netflix customers begin to roll out, it will become clearer if this has any effect on the platform's bottom line.
Source: CNBC