Not using your Netflix subscription, or maybe you forgot you had one because you never use it? Netflix wants to help. Last week the streaming video on-demand service announced it plans to cancel inactive memberships. Members who have not used their account in more than a year will receive emails and in-app notifications from Netflix to ask users if they want to keep their streaming video subscriptions. If Netflix does not receive a response, they will automatically cancel the dormant accounts.
“You know that sinking feeling when you realize you signed up for something but haven’t used it in ages? At Netflix, the last thing we want is people paying for something they’re not using,” said Eddy Wu of Netflix’s product innovation team.
Those who can’t live without seeing the next season of their favorite Netflix Original (e.g., Stranger Things, Grace & Frankie, Ozark, Lucifer) or exclusive content can easily resubscribe. According to Wu, inactive accounts represent less than half of 1% of all Netflix members, or a few hundred thousand members. Wu said Netflix has already factored inactive accounts into their financial guidance, so these cancellations are not expected to have any impact on the streaming giant’s bottom line.
“We’ve always thought it should be easy to sign up and to cancel. So, as always, anyone who cancels their account and then rejoins within 10 months will still have their favorites, profiles, viewing preferences and account details just as they left them,” Wu added. “In the meantime, we hope this new approach saves people some hard earned cash.”
This announcement comes a month after Netflix released its first quarter 2020 financials. In its April 21 letter to investors, Netflix was humbled by the growth its streaming video subscription service saw in the first quarter of 2020 as a result of COVID-19 and stay-at-home orders around the world. Global streaming paid memberships grew from 167.09 million in the fourth quarter of 2019 to 182.86 million in the first quarter of this year, representing growth of 22.8%.
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“At Netflix, we’re acutely aware that we are fortunate to have a service that is even more meaningful to people confined at home, and which we can operate remotely with minimal disruption in the short to medium term,” Netflix said. “Like other home entertainment services, we’re seeing temporarily higher viewing and increased membership growth. In our case, this is offset by a sharply stronger US dollar, depressing our international revenue, resulting in revenue-as-forecast. We expect viewing to decline and membership growth to decelerate as home confinement ends, which we hope is soon.”
Insider Take:
Personally, I cannot fathom my Netflix account going dormant. It is my “go to” streaming video subscription service, and it is probably not inactive for more than a few days at a time. However, I do subscribe to another service that I rarely use. I only keep it because I got a screaming deal on it on Cyber Monday last year. That said, I can appreciate what Netflix is trying to do here. They are trying to be mindful of how people spend their money and are proactively giving viewers the opportunity to cancel their services to save some cash. This may be a small gesture, but it is a meaningful one.
In addition to that, we love that they recognize that easy sign-ups and cancellations are important to retention. If a member finds enrolling in a subscription – or cancelling one if it doesn’t suit their needs – difficult, they won’t come back, and they may share their experiences with friends and family. By being proactive, Netflix is getting in front of the issue, creating some goodwill, and drawing attention to the fact that they understand times are tough for a lot of people right now.
