Netflix has announced to automatically freeze subscription payments for customers who haven’t used the streaming service for over two years. According to Deadline, investors put out a letter on Thursday revealing that Netflix’s new system causes a “slight hit” to the company’s revenue, but was necessary to help the brand’s customer satisfaction overall.
“A very small percentage of our members have not watched anything for the last two years and although we make it easy for people to cancel their subscriptions with just a few clicks, they have not taken advantage of that ability,” as Deadline reports the letter explaining. “So we decided to stop billing them and will do so for members meeting the same criteria going forward.”
This isn’t a new move; it’s been in the works for while. The letter confirms that pro-consumer policies like this are necessary and there are plenty of long-term benefits hold more value than the short-term costs. The company said that having the auto-pause approach if an account is continually dormant is how services should work.
If billing is paused and a user wants to resubscribe, it is simple to do so. As Netflix CEO and founder Reed Hastings said in an earnings interview posted on YouTube, “I think of it as, when someone churns, it’s always temporary. They’re gonna come back. It’s just a matter of timing as our service gets better, as maybe their income increases, as the internet gets faster. We love people to get a taste of Netflix. We hope they stay for 50 years.”
The subscriber base seems to be loyal and growing as Netflix has added 10 million subscribers during the second quarter and almost 193 million globally according to The Wall Street Journal. This is all in context of unprecedented times with limitations on social interaction; as Netflix put it, “many people are turning to entertainment for relaxation, connection, comfort and stimulation.”