Netflix Loses Upwards of $1.5B Annually on Password Sharing

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The streaming wars are upon us and before long, each of the streaming services will have to tweak its marketing — it’s soon to be a saturated market and the likes of Netflix and Hulu while have to do anything in their power to minimize any loss from subscribers fleeing to other products. Amidst reports of NBC offering Peacock free to anyone interested, you have platforms like Netflix, who continue to insist it won’t introduce advertising to the platform, despite being one of the pricier services on the market.

Then comes the issue of password sharing, something the streaming giant touched on in its latest financial earnings call. At the time, Netflix product boss Greg Peters suggested the company was continuing to keep an eye on the situation. “We continue to monitor it,” Peters said at the time. “We’ll continue to look at the situation and we’ll see those consumer-friendly ways to push on the edge of that but we’ve got no big plans at this point in time in terms of doing something different there.”

Peters has a pretty good reason to continually monitor the experience with the team. According to one recent study, Netflix loses upwards of $135 million per month — or a whopping $1.62 billion annually — by people who continue sharing their passwords and accounts with friends and family. The study, released in December by analytics firm Magid, assumes 10 percent of Netflix’s 13.7 million subscribers (at the time) password share with at least one other person.

Should Netflix remedy its password sharing problem, that’s a hefty chunk of change it could put towards additional original content in an attempt to draw more users to the service. Either way, fans and sharers alike should be expecting an impending crackdown on password sharing, no matter what Netflix decides to do. According to THR, the Alliance for Creativity and Entertainment — an anti-piracy group with members like Warner Brothers, Disney, Netflix, Sony, and Paramount — is gearing up to launch a crackdown on the password sharing in an attempt to better serve its members.

As the world of streaming and SVOD platforms continues to expand, consumers can expect companies to begin shifting marketing plans in dramatic ways, with password sharing happening to be the lowest hanging fruit.

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Photo by Rafael Henrique/SOPA Images/LightRocket via Getty Images

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