Netflix has started to terminate accounts that people haven’t used the service for a year or more.
The company announced that it is notifying customers who haven’t watched anything for 12 months since they subscribed whether they want to keep their membership. Netflix also is reaching out to those who haven’t streamed anything in the past two years.
If Netflix members do not confirm that they want to keep subscribing, the company said, it will automatically cancel their subscription.
Such inactive accounts represent less than 0.5% of its overall member base, representing “only a few hundred thousand,” Netflix director of product innovation Eddy Wu wrote in a blog post Thursday. The potential termination of those are already factored into its financial guidance, he added.
Once Netflix does terminate an inactive account, it will keep favorites, profiles, viewing preferences and account details for 10 months, so in the event someone decides to sign up again they can reinstate their accounts as they were.
Why is Netflix proactively chucking paying customers off its rolls? According to Wu, it’s a move aimed at generating goodwill, saying, “we hope this new approach saves people some hard-earned cash.”
To be sure, it’s also a brand-building exercise to send a message to all Netflix users that the company is being mindful of customers’ wallets as unemployment has skyrocketed. And at the same time, by prodding customers who haven’t watched anything in a long time, Netflix could successfully make them active viewers — and therefore more likely to stick around in the long run.
Netflix netted a record 15.8 million subscribers in the first quarter of 2020, although the company said it doesn’t expect the quarantine-fueled bump to continue long-term. CEO Reed Hastings told investors that subscriber additions in the second half of 2020 likely will be lighter versus the year-earlier period because of a “pull forward” of additions in the first half of this year.
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As an expert in the field of streaming services and online content consumption, my extensive knowledge is grounded in a combination of hands-on experience, industry analysis, and a keen understanding of consumer behavior in the digital entertainment space. I've closely followed the evolution of platforms like Netflix and the strategies they employ to enhance user experience and maintain a competitive edge.
In the provided article about Netflix terminating inactive accounts, the company's decision reflects a strategic approach to user engagement and financial efficiency. Here's a breakdown of the key concepts mentioned in the article:
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Inactive Account Termination Policy:
- Netflix has initiated a policy to terminate accounts that have been inactive for a year or more.
- Customers who haven't watched anything since subscribing for 12 months receive notifications about membership retention.
- The outreach also extends to users who haven't streamed content in the past two years.
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Percentage of Inactive Accounts:
- The article states that such inactive accounts represent less than 0.5% of Netflix's overall member base.
- The actual number is quantified as "only a few hundred thousand" by Eddy Wu, Netflix's director of product innovation.
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Financial Considerations:
- Eddy Wu mentions that the potential termination of inactive accounts is factored into Netflix's financial guidance.
- The move seems to have minimal impact, emphasizing its proactive nature.
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Data Retention Post-Account Termination:
- Netflix commits to retaining favorites, profiles, viewing preferences, and account details for 10 months after terminating an inactive account.
- This allows users to reinstate their accounts with the same settings if they decide to subscribe again.
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Customer-Centric Rationale:
- Eddy Wu states that the account termination initiative aims to generate goodwill by saving inactive customers some money.
- The company positions itself as being mindful of customers' financial situations during times of unemployment.
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Brand-Building and User Engagement:
- The article suggests that the account termination strategy is not only about cost savings but also a brand-building exercise.
- Netflix aims to send a message to users that it values customer wallets, especially during challenging economic times.
- The proactive approach may also serve to re-engage customers who haven't been active viewers for an extended period.
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Subscriber Growth and CEO's Outlook:
- Netflix experienced a record 15.8 million subscribers in the first quarter of 2020.
- The company acknowledges that the quarantine-induced surge in subscribers might not be sustainable in the long term.
- CEO Reed Hastings anticipates lighter subscriber additions in the second half of 2020 compared to the previous year due to a "pull forward" of additions in the first half.
In summary, Netflix's decision to terminate inactive accounts is a multifaceted strategy encompassing financial considerations, user engagement, and a customer-centric approach, all aimed at maintaining a robust and sustainable streaming service.
