That’s the recent edict from the rulers of streaming media, who are wishing to prevent the common habit of sharing account passwords without alienating subscribers who’ve grown familiarized with the hacking.
It is estimated that password sharing cost streaming services several billion dollars a year in lost revenue. That’s something it needs to address as spending on distinctive new programming skyrockets even if it is a small problem now for an industry that earns about $120 billion annually. “Lord of the Rings”, Amazon’s upcoming series for its first season alone will reportedly cost $450 million- higher than four times the cost of a season of “Game of Thrones” which is HBO’s.
“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. By creating profiles or by offering tiers of service with different levels of screen sharing allowed, the video companies have long offered legitimate ways for multiple people to use a service. To bite the bullet and pay full price for their subscription, stricter password sharing rules might spur more people. But alienation of users and driving them away can also be resulted due to too-tough clampdown.
In March, by entering a code sent via email or text, some Netflix users began to get pop-ups asking them to verify their account but also gave them the choice of verifying “later.” Netflix did not say if it was only in the U.S. or elsewhere or how many people were part of the test.
“They’ll be taking a very cautious approach to it,” Amobi said. “Handled the wrong way, there’s always a downside to a move like this.”
For Netflix, the test comes at a crucial time. The pandemic-fueled subscriber growth is falling. With more than 200 million subscribers globally, it remains the streaming service to beat. But including Disney+, which is cheaper and has quickly snapped up 100 million subscribers in less than two years, many new competitors have emerged.
In 2019, when Disney+ launched, the CEO Bob Iger said the service was modeled 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 something we have to watch.”
According to the Pew Center for Internet and Technology, Around two in five online adults have shared passwords with friends or family members to online accounts. It’s even higher among millennials passwords are shared by 56% of online adults aged 18- to 29.
“With the cost of all the streaming platforms bought together equaling a cable bill — which it was supposed to eliminate — I think it’s a great thing to be able to share your login to help family and friends save a few bucks,” said Ryan Saffell, 39, an IT director from Las Vegas.
According to the most recent data from research firm Park Associates, sharing or stealing streaming service passwords cost an estimated $2.5 billion in revenue in 2019. It is expected to rise to nearly $3.5 billion by 2024.
To produce their original movies and shows, companies are investing dizzying sums so that they stand out from competitors. On new content for Disney+, Disney+ said it’ll spend up to $16 billion a year. Hulu and ESPN+ by fiscal 2024. Research firm Bankr estimates that this year, Netflix is expected to spend $19 billion on originals.
“Programming spend is doubling, or in some cases tripling and quadrupling, so you have to fund it somewhere.” CFRA’s Amobi said. “Most services are looking at losses for the next few years before they break even. So they can use every subscription that they can get.”
Raising prices is another way to finance all this new programming. Last October, Netflix hiked the price of its most popular plan by $1 to $14 a month. In March Disney+ followed too with its own $1 a month increase, to $8.
A 30-year-old Seattle resident who works in public relations, Josh Galassi, says everyone known to him shares passwords. He said he would subscribe to the services he uses, but only if the shows he likes are on the service, like “The Good Fight” on Paramount+, if companies start to crack down. By subscribing only when the show is on and then canceling, he does that with Starz’ “Outlander.”
“One rule I have is I only share passwords with close friends or family members,” Galassi said. “Or somebody I know that has a service I don’t want to pay for, I’ll ask them if they’re willing to share in exchange for something that I pay for.”
By telling investors it was a continuing effort and nothing new, Netflix played down its March user verification test. It was promised by the Company co-founder and co-CEO Reed Hastings, not to spring any changes on customers too abruptly.
“We would never roll something out that feels like ‘turning the screws,’” Hastings said in an April call with analysts. “It’s got to feel like it makes sense to consumers that they understand.”