With the debut of its streaming service in 2007,Netflix caused a paradigm shift in the way viewers watch entertainment. Since then, the field has become cluttered with competitors. Amazon.com’s Prime Video and Disney-controlled Hulu are just the two most well known examples – and there are more on the way.
In late 2019, Disney debuted its flagship Disney+ service and the stock immediately soared to new all-time highs as signups surged to 10 million within just one day after its release (including those who committed early). Apple recently introduced Apple TV+, and Comcast and AT&T’s HBO said they would launch Peacock and HBO Max, respectively, in early 2020.
With many of the biggest names represented, it’s surprising that almost no one is talking about the billions of dollars streaming services are forfeiting as the result of password sharing.
For streaming platforms, issue is reaching epidemic proportions
While companies have acknowledged the practice over the years, password sharing has soared recently, according to an extensive report by Hub Entertainment Research. Hub surveyed 2,050 U.S. consumers with broadband who reported watching at least one hour of TV per week, and the results are startling.
Of all consumers, 42% said they have used someone else’s online TV service password to access a service, according to Hub’s Video Redefined report. With younger viewers, the numbers are even more troubling, growing to a whopping 78% among 13- to 24-year-olds.
The biggest loser is Netflix, as 69% of younger viewers admitted to using someone else’s password to access the service, but every major streaming service suffered from the same phenomenon. Rounding out the top three are Hulu at 59% and Amazon with 53%. Even though it only launched in November, Disney+ soared up the leader board with 53% of 13- to 24-year-olds accessing the service using someone else’s credentials.
Fewer consumers admit to handing out passwords, but the results are still stark. Among all consumers, 31% confessed to sharing their login information with someone who didn’t live in their household. That number more than doubled among among 13- to 24-year-olds, as 64% admitted to giving out their password to a friend or extended family member. The percentage is much lower among older adults, with 16% of consumers 35 or older saying they shared credentials.
Among younger viewers, Netflix is the most shared, with 56% giving out their password, but Disney rocketed up the charts – taking second place – with 31% of younger viewers sharing credentials. The other big names suffered similar fates, with Hulu at 30%, Apple TV+ at 17%, Amazon at 14%, and HBO Now at 10%.
Billions of dollars at stake
If the results are representative of the larger population of viewers – and there’s no reason to think they’re not – this has huge implications for the future of streaming. Netflix has the most to lose, as the company has the deepest penetration of any streaming service – but this poses a similar problem for all the streaming providers.
A study from late 2018 estimated that Netflix was forfeiting more than $1.6 billion per year from password sharing, according to research company Magid, and that’s assuming that just 10% of paid subscribers shared their password. There’s little doubt that figure has climbed from there.
No easy answer
Netflix CEO Reed Hasting has addressed the matter in the past, saying, “Password sharing is something you have to learn to live with.” When asked about Disney’s stance, CEO Bob Iger said in an interview, “We’ll watch it carefully with various tools, technology tools that we have available to us to monitor it. But it’s obviously something that we have to watch.”
That’s not to say they’re sitting idly by while password sharing costs them billions in revenue. The major streaming services, along with the biggest studios in Hollywood, are part of the Alliance for Creativity and Entertainment (ACE), which recently announced it was working to reduce “improper password sharing.” ACE, which counts Warner Bros., Disney, Netflix, Sony, Paramount, and Amazon, among others, among its members, is looking to develop technology solutions to combat password sharing, like limiting the number of devices that can access the same account.
Streaming services have been somewhat reticent in the past to crack down on the practice of password sharing for fear of angering consumers and losing potential future customers. As the streaming wars heat up, however, look for them to become less accepting of the practice.