Password sharing has become a common practice, especially when it comes to streaming services. From Netflix to Spotify, account sharing is a routine occurrence among friends, families, and sometimes, even between strangers. Unsurprisingly companies are cracking down or at least saying that they are. I want to give you a peek behind that curtain.

The Impact of Password Sharing

According to a 2019 survey conducted by Magid, approximately 35% of all millennials share passwords for streaming services. This figure jumps to 42% for the younger demographic of Gen Z, indicating that password sharing is far from a fringe activity. In monetary terms, this results in billions of potential revenue lost annually. A study by Parks Associates estimated that in 2021, password sharing could cost streaming services $9.9 billion in lost revenue.

The Response from Streaming Services

In response to the increasing prevalence of password sharing, many streaming services have begun to take measures to prevent it. For instance, in March 2021, Netflix, one of the largest streaming platforms, started testing a feature that would prompt certain users to verify their account via email or text message if they were not in the same household as the account owner. Many attribute their recent strong earning reports to be a direct result of successfully upgrading users to plans with more concurrent streams.

Similarly, other platforms like Hulu and Disney+ limit the number of devices that can stream from the same account simultaneously, thus indirectly limiting the extent of password sharing.

How does it work

It’s simple actually. Using tools like Redfast, a service can specify a threshold for concurrent consumption and even adjust that based on lifetime value. A prompt is automatically triggered when the user exceeds this threshold and they are presented with an option to upgrade to a plan with more concurrent usage. Some offer a ‘Day Pass’ option to temporarily allow concurrent consumption. This is surprisingly effective with the younger generations even though the day pass is at a significantly higher premium.

The Consumer's Perspective

From a consumer's perspective, sharing is caring. Most don’t see any harm in sharing their credentials with their friends. However, that is not entirely true. Imagine that your friend’s computer gets compromised. Now you email and password for Netflix can lead to serious issues, especially if the password used for a streaming service is the same as that for more sensitive accounts, like email or banking.

Looking Ahead

As a consumer you should know that the provider knows when you are sharing your credentials. Whether they do something about it is a different matter.

As a provider, you should know that just around half of the users who share credentials would not mind paying a little extra to be able to do that. I would recommend to offer a “Allow for today” prompt for a one time fee followed by prompts on subsequent visits offering an increased concurrency add-on to their plan. Make sure your subscription platform can add a pro-rated add-on to a current plan.

Using Redfast to tackle password sharing is our fastest growing use case. Talk to one of us for a detailed how-to if you are interested in exploring this further.