Netflix Will Begin Canceling The Subscriptions Of Inactive Members

Netflix will soon begin canceling the subscriptions of inactive members, an extremely unusual move for a business model based on recurring subscriptions, CNBC reported.

Beginning this week, Netflix customers who haven't used the streaming service in a year or more will get a notification, whether through the app they use or, failing that, via the email address associated with their account, asking if they want to maintain their membership.

If the customer doesn't respond to the email, their account will be canceled.

"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," said Eddy Wu, the platform's director of product innovation.

Further, as Wu notes in a blog post on the company's website, any customer whose account is inactivated, but then decides later that they want to come back, will find that their settings, profiles, preferences, and recommendations have not changed.

"At Netflix, the last thing we want is people paying for something they're not using," he says.

The number of Netflix customers who have accounts but have sat on them for over a year is comparatively small: less than one-half of one percent of the company's approximately 183 million subscribers.

"We hope this new approach saves people some hard earned cash," Wu writes.

HOLLYWOOD, CA - APRIL 20: In this handout photo provided by Netflix, is a view of Netflix's headquarters located in Los Gatos on April 20, 2020 in Los Gatos, California. (Photo by Netflix via Getty Images)
Netflix via Getty Images

That a business whose income is dependent on paid subscriptions would actively purge inactive members is almost antithetical to the business model.

For this reason, it's unclear why Netflix is undertaking this seemingly drastic step now. However, CNBC notes that Netflix is now simply one player -- albeit likely the biggest player -- in a crowded streaming market. Amazon Prime, Hulu, Disney Plus, and a number of other streaming services, some tied to an existing brand, are all competing for subscribers' dollars.

By canceling inactive memberships, notes CNBC writer Jessica Bursztynsky, the company could potentially stand out against the ever-growing list of its competitors. The move also makes a statement about the value of its service for customers.

Netflix is one of the few industries to have financially benefited from the coronavirus pandemic. With millions of people around the world suddenly finding themselves stuck at home with time on their hands, many have turned to streaming services such as Netflix or its competitors. In the past quarter, which includes the arrival of the coronavirus pandemic, Netflix saw a huge increase in its number of subscribers.