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Netflix Could Be Losing Millions Each Month Due to Password Sharing

For years, most streaming services have taken a relatively lax attitude towards password sharing. While they’re officially against it policy-wise, they’re just not taking the relatively easy steps to prevent it. 

Netflix raised some eyebrows though late last year when during their third-quarter earnings call, they said they were “looking at consumer-friendly ways to push back at the edges of password-sharing.” What that means exactly is yet to be seen. But if streaming services really do start cracking down on password sharing, how much of an effect will it have? How many people are really doing it? 

A recent study from The Manifest, a digital insights company that helps brands better understand their customers, gives us some insight. 

Netflix was by far the most popular streaming service in this study, with 75% of people having a current subscription. Amazon was in second place with 56% and Hulu in third with 40%. These numbers do fall just a little above what other, larger studies show (this one was conducted with just over 400 people), but the overall makeup generally holds true to larger studies, so the numbers are worth diving into further. 

More than a third of people – 34% – said they share a streaming service subscription with 1 to 2 other people and 27% said they share one with 3 to 4 people. 9% share a service with 5-6 people and 4% with 6 or more. Added together, that means almost 75% of people share a paid streaming subscription with someone else. 

Most of the people who share a subscription said they do so with family or friends they live with (which honestly, sharing a password in the same household barely counts to me), but 37% of people share a password with someone they don’t live with. 

Sure, not all of that 37% would subscribe to a service if they didn’t have free access, but you have to imagine some would. And while that’s a significant loss of income for the streaming companies, there are some customers that would drop a subscription if they couldn’t share it, so perhaps it evens out.   

Let’s break that down into some solid numbers. Netflix has right at 182 million subscribers currently. Around 74% are sharing, but we throw out the 65% of that number sharing in-house (because again, it almost seems silly to count that especially when services have multiple profiles for that purpose). That’s still about 4.7 million people sharing a password with another house. If you count every one of those shares as a lost subscription (not figuring in passwords shared 2, 3, 4, or more times), at $12.99 a month, that’s about $620 million a month in lost revenue. 

Of course, those are hypothetical numbers from a somewhat small sample size, but the overall idea is true.  If Netflix suddenly clamped down on password-sharing, would their revenue balloon over $600 million a month? Probably not. Other studies have shown though that anywhere from 5 million to 14 million people benefit from a shared Netflix password, so maybe the numbers are on point. 

Anyway you break it down. it’s a look at just how harmful password sharing can be.

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