Tech

Netflix Wants to Curb Moochers With New Family Plan

By Nina Sen , Apr 23, 2013 02:25 PM EDT
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Netflix will soon offer a family plan for $11.99 a month stream-only, which allows four users to stream the online entertainment source at the same time on four individual devices. That's about $4 more than the $7.99 a month stream-only plan that has a limit of two simultaneous streams.

The move is meant to increase viewership and to curb password-sharing among friends or relatives. In a quarterly letter to shareholders, CEO Reed Hastings and CFO David Wells made the announcement, noting "a few members with large families run into our 2-simultaneous-stream limit."

According to Michael Pachter, a Wedbush Securities analyst in Los Angeles, as many as 10 million people are watching the online video service without paying. Currently, the company doesn't restrict the number of PCs, tablets, iPhones or other devices that can use one account. It also doesn't limit the number of people who can sign in, though it limits each account to playing two video streams simultaneously.

Netflix anticipates that only one percent of existing customers will take advantage of the upcoming plan. If the move is successful, other online streaming services, like Hulu, could follow suit. Currently, Hulu Plus allows for just one stream at a time.

The company has been trying to increase consumer loyalty by building a film and television library that stands out from competitors such as Amazon.com, Hulu and Redbox Instant by Verizon. Netflix has also garnered several licensing deals with Warner Brothers and other media giants while creating its own original programming. The original series "House of Cards" was its most-watched program to date.

In addition, Netflix reported 29.17 million paid subscribers in the U.S. for the first quarter of 2013, a pretty high number for entertainment that doesn't have its own cable channel. In contrast, the number two television channel, HBO, had 28.7 million subscribers at the end of last year.

The company hasn't announced when it plans to roll out the changes.

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