Passing on your password? Streaming services are past it
NEW YORK (AP) — 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. The 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 popups asking them to verify their account by entering a code sent via email or text, but also gave them the choice of verifying “later.” Netflix did not say how many people were part of the test or if it was only in the U.S. or elsewhere.
“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.”
The test comes at a crucial time for Netflix. Last year’s pandemic-fueled subscriber growth is slowing. It remains the streaming service to beat with more than 200 million subscribers globally. But 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 modeled on sharing.