Netflix To Automatically Cancel Unused Subscriptions

Netflix Inc. NFLX said on Thursday it would automatically cancel subscriptions of users who haven't watched any content on its platform for an entire year.

What Happened

The streaming video-on-demand service provider said it would send an email to users asking if they would like to discontinue their subscriptions after having not used it for 12 months.

"If they don't confirm that they want to keep subscribing, we'll automatically cancel their subscription," the California-based company said in a statement.

Netflix noted that it doesn't want "people paying for something they're not using."

According to the company, it will be "really easy" for users to restart their subscriptions if they want. Their account, including content preferences, bookmarks, and other relevant information, will be kept intact for ten months following the discontinuation of subscription.

Netflix said inactive accounts make up for less than 0.5% of its members and are already factored in its financial guidance for the next quarter.

The company has seen a surge in business during the novel coronavirus (COVID-19) pandemic. It reported a 27.6% increase in sales in the first quarter compared to the similar quarter a year ago.

Price Action

Netflix shares closed 2.5% lower at $436.25 on Thursday and traded 50 cents higher in the after-hours session. The shares are up 34.8% year-till-date.