Report: Password Sharing Costs Streaming Services $2.3 Billion in Annual Lost Membership Revenue

With Netflix testing charging subscribers in Chile, Costa Rica and Peru a reduced fee if they share passwords with third parties, the streamer is attempting to put a lid on a growing trend: password mooching.

While Netflix initially encouraged password sharing as an organic way to entice subscriber growth, with the SVOD behemoth now realizing lower quarterly net sub adds, new data from Cordcutting.com estimates the service will lose more than $790 million in membership revenue this year due to password sharing — tops among all SVOD services.

Other streaming platforms such as HBO Max, Disney+ and Hulu will lose $477 million, $440 million and $436 million, respectively. That “breakage” revenue collectively tops $2.3 billion in annual membership revenue lost when including Paramount+, Amazon Prime Video and Peacock.

Of the 215 million people in the U.S. using SVOD services, the report contends 25% are using someone else’s paid-for account. Indeed, the average account borrower accesses up to two, third-party accounts, which equates to almost 86 million shared accounts.

The report, citing a survey of 790 U.S. adults early this year, found that the most-shared accounts include HBO Max, Disney+ and Amazon Prime Video. Among survey respondents, Netflix remains the overwhelming favorite platform with 92% market share.

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Platform 2019 2020 2021 2022
Netflix 89% 91% 90% 92%
Prime Video 61% 74% 75% 76%
Hulu 43% 56% 60% 66%
Disney+ 45% 51% 48% 54%
HBO Max 45% 45%
Peacock 36%
Paramount+ 29%
    As platforms attempt to clamp down on password sharing, the report found that among moochers unable to access third-party SVOD accounts, 45% would pay for Paramount+, followed by 38% paying for Peacock, 31% for Hulu, 30% for Netflix, 26% for HBO Max, 25% for Disney+ and 21% for Prime Video.
    “The vast majority of American adults watch streaming platforms, and even though most people are no longer isolating at home [due to the pandemic], it’s reasonable to assume that we will still devote billions of minutes to our favorite streaming shows and movies in 2022,” read the report. “And as long as there is demand for streaming content, mooching (or sharing, if you prefer) will continue.”

Report: Pay-TV Subs Spend as Much on SVOD as Cord-Cutters

A longtime marketing advantage of over-the-top video was its cost-effectiveness to traditional pay-TV bundle. As SVOD services proliferate, the combined cost of services is narrowing the pay-TV divide, suggesting relative cost savings moot. Notably, new data from Cordcutting.com finds that pay-TV subs are spending as much on SVOD as cord-cutters — around $45 monthly — while maintaining linear-TV access.

Thanks to comparable streaming budgets, cord cutting savings remain clear. Pay-TV subscribers spend an average of $168 a month on TV entertainment and broadband, roughly double the cord-cutter average of $86 a month.

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Notably, cable and satellite TV customers subscribe to an average of 4.4 streaming services, which is greater than the 4.1 average for cord-cutters. Indeed, pay-TV subs spend an average of $45 a month on streaming, which is greater than the $37 a month spent by cord-cutters.

“Our findings suggest that convenience and other non-financial factors in streaming aren’t as important to the cord-cutting trend as might be imagined,” read the report. “But, conversely, the high levels of streaming spending among cord-havers suggest that convenience, original content, and other factors are more important — not to the narrow world of cord-cutting, but to the broader world of TV entertainment.”