They lose billions of dollars in revenue every year
new York- Many of us have been taught to share since we were young. Now, streaming services from Netflix to Amazon to Disney+ hope we don’t.
This is a new decree from the streaming media giants who want to prevent the common practice of sharing account passwords without alienating subscribers who are accustomed to this technique.
It is estimated that sharing passwords will cause billions of dollars in lost revenue to streaming media services every year. For an industry with annual revenues of approximately $120 billion, this is now a small problem, but they must solve these problems because they have to spend on a unique new programming leap. According to reports, the upcoming Amazon series “Lord of the Rings” will cost $450 million in the first season alone, more than four times the cost of HBO’s “Game of Thrones” in one season.
This is a complicated balance. For a long time, video companies have provided legal methods for multiple people to use services, create profiles, or provide service levels (allowing different levels of screen sharing). Strict password sharing rules may prompt more people to gnash their teeth and pay for their subscriptions in full. However, severe repression can also alienate and alienate users.
In March, some Netflix users began to receive pop-up windows asking them to verify their accounts by entering a code sent via email or SMS, but they can also choose to verify “later”. Netflix did not disclose the number of people participating in the test, or only in the United States or elsewhere.
This test is a crucial moment for Netflix. User growth driven by the pandemic last year is slowing. It is still a streaming service, with more than 200 million subscribers worldwide. However, there has been a series of new entrants, including Disney+, which is cheap and quickly attracted 100 million subscribers in less than two years. When Disney+ launched in 2019, then CEO Bob Iger stated that the service was based on sharing.
According to data from the Pew Networks and Technology Center, approximately two-fifths of adults share online account passwords with friends or family members online. Among millennials, the ratio is even higher: 56% of online adults 18-29 years old share passwords.
Another study found that more than a quarter of video streaming services in all households are used by multiple households. This includes a family member or friend who is sharing the bills they have to pay outside the house, or sharing the expenses by multiple families, which is rare. According to the Leichtman Research Group, 16% of households have at least one service that is fully paid for by others. For people aged 18 to 34, this proportion rises to 26%.
According to the latest data from research firm Park Associates, the revenue from sharing or stealing streaming media services’ passwords is estimated at 2.5 billion U.S. dollars in 2019 and is expected to grow to nearly 3.5 billion U.S. dollars by 2024.
This may be just a small part of eMarketer’s prediction that people will spend $119.69 billion on video subscriptions in the United States this year. But user growth is slowing, and costs are rising.