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Netflix Signals It May Limit Password Sharing

But the streaming service must tread lightly because competition is fierce

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Netflix recently suggested it will crack down on sharing logins with people who don’t live under the same roof.

This stance from the streaming giant behind binge-worthy fare such as Grace and Frankie, Ozark and Stranger Things may leave you wondering whether other streaming services you routinely watch will require a separate account for all viewers at different addresses. The warning appears to put those sharing passwords or mooching off others on notice. But it also opens the door for streaming providers to adopt the kind of friends-and-family plans prevalent in the cellphone industry.

“I think that is definitely a model they are looking at closely,” says Andrew Hare, New York-based senior vice president of research, global media and entertainment at Magid research strategy. In March, Netflix began testing two paid sharing features in Chile, Costa Rica and Peru that could hint at what will come to the United States.

In one pilot Add an Extra Member plan, subscribers on Standard and Premium plans can add “sub accounts” at a reduced price for up to two people they don’t live with. Each person receives a login, password, profile and personalized recommendations. Netflix wants to study how the trial runs work in Latin America before introducing them elsewhere.

“I think Netflix gets the argument that you might be sharing a password with your sister in another state or introducing Mom and Dad to new content through password sharing,” Hare says. But after the country’s largest streaming service lost subscribers this year for the first time since 2011, it’s looking for other ways to grow.


Why people share streaming service passwords

Nearly half, 46%, of video streaming service subscribers surveyed, say they give their log-ins to people who don’t live with them.
 

  


How common is streaming service sharing?

Nearly 2 in 5 Americans admitted to using another person’s streaming login, according to a February 2021 survey of more than 1,500 consumers commissioned by Lending Tree. More than half of those who said they did streamed Netflix, compared to 31 percent on Hulu, 28 percent for Disney+ and 22 percent for Amazon Prime Video.

In the survey, most people “borrowing” account credentials were family members of the account holder. About a quarter were friends, 20 percent significant others, and even 5 percent an ex. Almost a third confessed to secretly logging in without the subscriber’s permission.

Older adults are among the folks sharing streaming credentials with people who live outside their homes, but in smaller numbers compared to those younger, according to a 2018 survey of 1,000 streamers from Comparitech, a consumer website devoted to cybersecurity and privacy.

About a third of boomers and Generation Xers believe it is ethical to give access to streaming content, compared to 76 percent of Gen Z streamers and 63 percent of millennials. The percentages were similar for those who believed it was ethical to receive access.

Longstanding tolerance of password sharing

In an April letter to shareholders, Netflix acknowledged that password sharing helped fuel its growth by getting more people to use the service. It now sees those viewers as a big opportunity to reverse its subscriber losses.

“Streaming services are certainly trying to adopt a one-account-per-household policy. And cracking down on password sharing is a big part of that,” says Paul Bischoff, editor of Comparitech.

"My guess is they'll [Netflix] go after the people who are the most rampant sharers first."

— Rich Greenfield, LightShed Partners

Netflix, which raised its prices in January, has three unlimited streaming tiers in the United States: The Basic $9.99 monthly plan lets viewers watch on one screen at a time. The $15.49 Standard plan lets them watch on two screens at the same time, including in high definition. And the Premium $19.99 monthly allows four screens simultaneously and includes Ultra HD content where available.

Netflix probably knows who the serial abusers are, says Rich Greenfield, a partner at LightShed Partners media and telecommunications research in New York. “My guess is they’ll go after the people who are the most rampant sharers first.”

Beyond Netflix’s 222 million households with paying subscribers, its letter estimates the streaming service is being shared with 100 million more households. The number of subscribers grew steadily during the pandemic, but some started leaving in the first three months of this year.

Netflix worries that 2 million will depart

The 200,000 who quit are forecast to swell to around 2 million in the next three months. During the pandemic, streaming competition has grown to include Amazon Prime Video, Apple TV+, Disney+, HBO Max, Hulu, Peacock, Paramount+ and YouTube TV, plus ad-supported video on demand (AVOD) services.

While losing accounts isn’t ideal for any streaming provider, the pressure on Netflix may differ from that on its rivals. Most notably, Amazon and Apple have other businesses more critical to their bottom lines.

“In some ways it is a win-win for the rival services because they will be looking to see if the password crackdown works and drives growth for Netflix, in which case they may consider a similar policy,” Magid’s Hare says. “Or if there is backlash and Netflix actually loses subscribers, they may stay away from the issue and be perceived as more consumer friendly.”

Might Disney be next? The company reportedly sent a questionnaire to Disney+ subscribers in Spain asking why they share passwords with people outside the home. 


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The risk of sharing passwords

Apart from ethical or legal concerns, when you spread your password to outsiders, even people you trust, you’re taking a risk. People tend to use the same or similar passwords across numerous websites and services, though it is a big security no-no.

“If you had someone’s password, you could log into their Netflix, know the type of content that they’re watching, and more easily come up with a targeted phishing attack on them,” says Chandler Givens, director of product management for consumer privacy at Avast digital security. “You’d say, ‘We know you watched Caddyshack 15 times in the past year. We think you’ll like this. Click here.’ And then you click here and it’s malware.”

About a quarter of users worldwide have never changed their passwords, according to Avast research. And 83 percent of Americans use weak passwords that are easy to crack.

Price increases force choices

The greater number of streaming options coupled with price increases in recent years are causing consumers to look at their budgets, Hare says.

The average number of video-on-demand services that viewers subscribe to doubled between 2019 and the end of 2021, with the average monthly tab for such services increasing by about $10 to $23.58, according to Magid. And more people subscribe to four or more services than those who don’t subscribe at all.

“Consumers are hitting their limits with how much they are willing to pay and to how many services they will subscribe,” Hare says. Netflix knows its subscribers could switch easily. “Netflix does not want this to backfire and lose consumer goodwill.”

Edward C. Baig is a contributing writer who covers technology and other consumer topics. He previously worked for USA Today, BusinessWeek, U.S. News & World Report and Fortune and is the author of Macs for Dummies and coauthor of iPhone for Dummies and iPad for Dummies.

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