NEW YORK (AP) – Many of us have been taught to share as children. Now streaming services, ranging from Netflix through Amazon to Disney +, want us to stop.
This is the new decree from the giants of the streaming media, who hope to discourage the usual practice of sharing account passwords without alienating subscribers accustomed to hacking.
It is estimated that sharing passwords will cost streaming services several billion dollars a year in lost revenue. Now this is a small problem for an industry that earns about $ 120 billion a year, but something that needs to be addressed as the cost of distinctive new programs jumps sharply. Amazon’s upcoming “Lord of the Rings”
“Honestly, the industry is gravitating towards this. The question is when, not whether,” said CFRA analyst Tuna Amobi. “The landscape seems to be quite tuned from the perspective of these new entrants, so it looks like a good time to deal with subscribers much better.”
This is a complex balance. Video companies have long offered legitimate ways to use a service from multiple people, by creating accounts or by offering service levels with different screen sharing levels allowed. Stricter password-sharing rules can encourage more people to bite the bullet and pay full price for their own subscription. But too severe a restriction can also repel consumers and drive them away.
In March, some Netflix users began receiving pop-ups asking them to verify their account by entering a code sent via email or text, but also allowing them to check “later.” Netflix did not say how many people were in the test or whether it was only in the United States or elsewhere.
“They will be very careful about that,” Amobi said. “Processed in the wrong way, there is always a flaw in such a move.”
The test comes at a crucial time for Netflix. Last year’s subscriber growth, fueled by a pandemic, is slowing. It remains for the streaming service to win with over 200 million subscribers worldwide. But many new competitors have emerged, including Disney +, which is cheaper and quickly garnered 100 million subscribers in less than two years.
When Disney + launched in 2019, then CEO Bob Iger said that the service was created on a sharing model.
“We are creating a service that is very family-friendly, we expect families to be able to consume it – for example, four live streams, for example,” he said in an interview with CNBC. “We’re going to monitor it closely with different tools, technological tools that we have to monitor it. But obviously that’s something we need to monitor.”
Approximately two out of five adults online share online account passwords with friends or family, according to the Pew Center for Internet and Technology. Among the millennium, this is even higher: 56% of online adults between the ages of 18 and 29 have shared passwords.
“Since the cost of all streaming platforms purchased together is equal to a cable bill – which had to be eliminated – I think it’s great to be able to share your login details to help family and friends save a few bucks.” said Ryan Safel, 39, an IT director from Las Vegas.
Another study found that more than a quarter of all video streaming services are used by multiple households. This includes a family or friend sharing the account they pay for outside the household, or less often several households sharing the expenses. And 16% of all households have at least one service that is fully paid for by someone else, according to a study by the Leichtman Research Group. This increases to 26% for 18- to 34-year-olds.
Sharing or stealing passwords for streaming services will cost approximately $ 2.5 billion in revenue in 2019, according to the latest data from research firm Park Associates, and this is expected to rise to nearly $ 3.5 billion by 2024.
That could be a fraction of the $ 119.69 billion eMarketer predicts that people will spend on video subscriptions in the United States this year. But subscriber growth is slowing and costs are rising.
Companies invest staggering sums to produce their own original films and shows and to stand out from the competition. Disney + has said it will spend up to $ 16 billion a year on new content for Disney +, Hulu and ESPN + by fiscal 2024. Netflix is expected to spend $ 19 billion on originals this year, research firm Bankr estimates.
“Programming costs have doubled or in some cases tripled and quadrupled, so you have to fund them somewhere,” said Amobi of CFRA. “Most services look for losses over the next few years before they catch up. So they can use any subscription they can get.”
Another way to fund all this new programming is to raise prices. Netflix raised the price of its most popular plan by $ 1 last October to $ 14 a month. Disney + followed in March with its own increase from $ 1 per month to $ 8.
Josh Galasi, a 30-year-old Seattle public relations official, says all acquaintances share passwords. If companies start falling apart, he said he would subscribe to the services he uses, but only if the shows he likes are on a service like Paramount +’s “Good Battle.” He does this with Starz’s “Outlander,” subscribing only when the show is on and then canceling.
“One rule I have is to share passwords only with close friends or family members,” Galasi said. “Or someone I know has a service I don’t want to pay for, I’ll ask them if they’re willing to share in return for something I pay for.”
Netflix launched its consumer screening test in March, telling investors it was an ongoing effort and nothing new. Co-founder and co-CEO of the company Reid Hastings promised not to cause any changes in relation to customers too sharply.
“We would never release something that looked like turning the screws,” Hastings said in an April call to analysts. “It has to feel that it makes sense for consumers who understand.”
Copyright © 2021 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
More stories that may interest you