Passing on your password? Streaming services are past it
Many of us were taught to share as kids. Now streaming services ranging from Netflix to Amazon to Disney+ want us to stop.
That’s the new edict from the giants of streaming media, who are hoping to discourage the common practice of sharing account passwords without alienating subscribers who’ve grown accustomed to the hack.
Password sharing is estimated to cost streaming services several billion dollars a year in lost revenue. That’s a small problem now for an industry that earns about $120 billion annually, but something it needs to address as spending on distinctive new programing skyrockets. Amazon’s upcoming Lord of the Rings series will reportedly cost $450 million for its first season alone — more than four times the cost of a season of HBO’S Game of Thrones.
“Frankly, the industry has been gravitating toward that. It’s a question of when, not if,” said CFRA analyst Tuna Amobi. “The landscape seems to be pretty set in terms of these new entrants, so it seems like a good time to get a much better handle on subscribers.”
It’s a tricky balance. Video companies have long offered legitimate ways for multiple people to use a service, by creating profiles or by offering tiers of service with different levels of screen sharing allowed.
Stricter password sharing rules might spur more people to bite the bullet and pay full price for their own subscription. But a too-tough clampdown
could also alienate users and drive them away.
In March, some Netflix users began to get pop-ups asking them to verify their account by entering a code sent via email or text, but also gave them the choice of verifying “later”.
The test comes at a crucial time for Netflix. Last year’s pandemic-fuelled subscriber growth is slowing, and a bevy of new competitors have emerged, including Disney+, which is cheaper and has quickly snapped up 100 million subscribers in less than two years.
When Disney+ launched in 2019, then CEO Bob Iger said the service was modelled on sharing.
“We’re setting up a service that is very family-friendly, we expect families to be able to consume it - four live streams at a time, for instance,” he said in a CNBC 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 we have to watch.” —