As many as two-thirds of Netflix users are sharing their passwords and account details with other people, according to research from GlobalWebIndex (GWI).
A study of 5,721 Netflix users, aged 16 to 64, in the U.S. and U.K. revealed that only 35 percent of subscribers claim to be sole users of their account.
Conversely, 30 percent share their account with one other person, 16 percent share their credentials with two others, and 19 percent with three others.
This study comes a few weeks after research from Parks Associates suggested that credential-sharing will cost the video-streaming service industry $500 million in direct revenues globally in 2015.
June 5th: The AI Audit in NYC
Join us next week in NYC to engage with top executive leaders, delving into strategies for auditing AI models to ensure fairness, optimal performance, and ethical compliance across diverse organizations. Secure your attendance for this exclusive invite-only event.
In Parks’ The Cost of Piracy report, figures show that six percent of U.S. broadband households use an over-the-top (OTT) video service that is paid by someone NOT living in the house.
Above: Age-groups for password-sharing
Delving deeper into the demographics reveals that the younger the OTT service user, the more likely they would be using someone else’s credentials.
While this latest study by GWI offers an interesting additional perspective on the password-sharing “problem” faced by the likes of Netflix, it doesn’t tell the full story.
Indeed, the question respondents were asked was:
“You said that you used Netflix last month. Are you the only user of your Netflix login/account, or do you share it with other people?”
There is no mention here of whether the credentials are being shared with people not living in the same household. And it doesn’t address whether the users are on a “multi-screen” subscription plan.
Multiple screens
Netflix actively encourages multiple users of the same account with its “Standard” and “Premium” price plans. Those on the $8/month “Basic” plan can only watch on one screen at any given time, while those on the $9 and $12 plans can simultaneously watch 2 and 4 screens respectively.
Above: Netflix price plans
Netflix doesn’t brand these as “Family Plans,” but it’s clear that this is its intention. Such pricing structures are typically aimed at those living in the same household, similar to what Spotify offers with its music-streaming plans.
However, Netflix doesn’t expressly prohibit sharing accounts with those outside the household. In its Terms of Use, it says:
“The member who created the Netflix account and whose Payment Method is charged is referred to here as the Account Owner. The Account Owner has access and control over the Netflix account. The Account Owner’s control is exercised through use of the Account Owner’s password and therefore to maintain exclusive control, the Account Owner should not reveal the password to anyone.”
It’s not particularly aggressive prohibition, and presumably if you don’t actively “reveal” the password, instead choosing to log your buddy/significant other into the account yourself, then you’re technically not contravening their terms.
On Netflix, four friends could potentially club together for the $12 plan and save themselves $5 a month each compared to what it would cost if they each signed up to a Basic plan. Plus, they have the added benefit of being able to watch content in HD, which isn’t available to Basic users.
While some “single screen” subscribers may well share their account with others, it likely isn’t a rampant problem, given that the account owner would be precluded from using it if their friend across town is on a Breaking Bad binge.
With 65 million subscribers globally — two-thirds of whom are based in the U.S. — it’s easy to see how Netflix could be losing a lot of revenue by letting users pool their funds and share an account. But the video-streaming landscape is increasingly competitive, so the attitude so far seems to be more about encouraging people to use the service, with the hope they will eventually sign up to have full control over their own account.
In an interview last year, HBO CEO Richard Plepler seemingly emulated Netflix’s stance when he stated that he didn’t care about HBO Go password-sharing, saying that it had no effect on the business.
With Netflix bumping its subscriber base by 3.3 million in the last quarter — a record for the company — it’s seemingly laser-focused on producing quality, original content to ensure that these numbers remain on an upwards trajectory.
But using the figures provided by GWI, it’s worth taking a speculative look at what Netflix’s numbers could be if everyone who uses someone else’s account had an account of their own.
Translating GWI’s percentages onto Netflix’s 65 million user base, that would mean that 19 million people (30 percent) share their account with one other person, 10 million people (16 percent) share it with two other people, and 12 million people (19 percent) share it with at least three other people.
This would mean that there are at least 77 million people out there watching Netflix without an account of their own. Many of these will no doubt be children, or represent part of a household “family” plan. But even if a fraction of these are taking advantage of Netflix’s setup and were somehow “forced” to sign up themselves, this would serve as a huge cash influx and subscriber boost for the company. If a million of these people paid the $96-a-year subscription fee, that would equate to $96 million extra in revenue. If 10 million did, that would be close to $1 billion.
This is all purely academic, of course. But it helps give some perspective to what Netflix is missing out on through shared accounts.
