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Netflix plans to change up its family streaming service

Users can currently only stream two devices at once, but the video service is looking to charge a little more for a four-device option. Could this be a precursor to cracking down on account sharing?

(Credit: PRNewsFoto/Netflix Inc.)

Netflix is taking a closer look at how to cater its video-streaming service to families.

In a letter to shareholders (PDF) on Monday, the company said it plans to introduce a family streaming plan in the U.S. that would let up to four people stream at the same time. However, this also means that Netflix may be looking for a way to minimize several people sharing one account.

The plan would cost $11.99 per month and let subscribers stream as many as four devices simultaneously. Netflix's current plan, which costs $8 a month, allows two streams at the same time. The company predicted that "fewer than 1 percent" of current subscribers would sign up for this plan.

"For the relatively few folks who bump up against the two simultaneous stream limit, we've provided a new option," Netflix spokesman Jonathan Friedland told CNET.

Wedbush Securities analyst Michael Pachter told CNET that he's not sure how helpful the two vs. four streams would be for users. "You don't have households where people are watching five screens at once," he said.

However, he does think that this move may be a precursor to Netflix putting the kibosh on multiple users sharing just one account. As Netflix's terms of use now stands, customers can use six authorized, Netflix-ready devices. This means that friends living in different locations can share the cost of one account as long as no more than two streams are going at once.

If Netflix were to introduce two to four "devices," rather than "streams," as part of its basic package, the company could cut down on such sharing and ultimately boost its bottom line.

"That will kill piracy, which I think is the intent," Pachter said. "I think it's fair if Netflix is being taken advantage of, they should ask for compensation."

In addition to developing a family streaming plan, Netflix also said a "profiles" feature for families is in the works. The feature would let several family members share one account but have different queues, which would be a bonus for families with different tastes and in various age groups that all share one jumbled queue.

"In many households, Netflix is used by different family members, and we tested a 'Profiles' feature that separates the activity of each individual," Netflix said in its letter to shareholders. "This enables us to offer more relevant personalized suggestions for each individual."

The company said it expects to roll out the profiles feature worldwide in the next few months. It's unclear if Netflix will charge users for separate profiles. Pachter believes that if the company charged a minimal amount, people wouldn't mind paying for such a service.

"I think that profiles is the kind of thing they could charge a buck a month for. I actually think a lot of people would pay for that," Pachter said. "I think that it is a smart idea and it would be a well-received price increase."

These plans for new family features come as Netflix announced surprisingly good first-quarter earnings on Monday. The company posted adjusted earnings per share of 31 cents. Revenue was $1.02 billion. Wall Street expected slightly more than $1 billion in revenue and earnings of 18 cents to 19 cents a share. A year ago during the same quarter, the company lost $5 million, or 8 cents a share, on revenue of $870 million.