Analyst: Password Sharing Costs Netflix $6.2 Billion Annually

Netflix recently began cracking down on subscribers sharing their passwords with non-members, and with good reason. New data from Citi Global Markets analyst Jason Bazinet contends the SVOD behemoth is losing about $6.2 billion each year in potential revenue when non-subs stream content using someone else’s password.

Specifically, Bazinet contends subscription streaming video services in the U.S. lose about $25 billion annually from shared passwords. Netflix’s 2020 revenue totaled $25 billion.

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“As streaming services move to center stage, thwarting this theft will be of growing importance for shareholders,” Bazinet wrote in a note.

Research firm Magid suggests 33% of all subs across the SVOD market in the U.S. share passwords, while Bank of America Securities contends Netflix could significantly enhance sluggish domestic sub growth by getting tougher on shared passwords.

“And cracking down on that could be a potential tailwind to net additions,” BofA analyst Nat Schindler wrote in a recent note.

Schindler says Netflix has around 204 million paid global subscribers, while adding a record 37 million new subs in 2020. But citing an internal survey, the analyst said the SVOD giant could have added even more subs.

“In our streaming survey, we asked a pool of Netflix subs if they shared the service with another household … and 26% said they did, and 50% of these said it was shared with family in multiple locations,” Schindler wrote.

The analyst suggests Netflix offer a lower-cost subscription tier for budget-conscious consumers, which, when combined with a crackdown on password sharing, would provide “a boost to net subscriber adds.”