Sharing a Netflix password with a partner or close friend is a common practice, and the company has chosen to tolerate it. A recent survey by Reuters found that 12 percent of adult users on Netflix, Amazon, HBO Now or Hulu have used borrowed credentials. If half of that audience had their own account, Netflix could collect about $391 million more per year.
Netflix has become the terror of traditional cable. Despite technical obstacles, abusive practices by internet service providers, and ever-present geographic restrictions, it is undoubtedly the number-one subscription video streaming service. Through that popularity, different practices have emerged among users. One was the use of VPN services to access catalogs of other regions; however, Netflix was forced to implement blocks. Another is sharing credentials. Unfortunately, payment methods on Netflix can be very irregular depending on the region, and the absolute rejection of cash causes some users to access its content only with someone else's help. Of course, there are also family and couple cases that don't involve money, but the underlying question is the same: What does Netflix think about password sharing?
The numbers behind the debate
In October 2016, CEO Reed Hastings said there were “no plans” to change the situation, but the CEO’s vision is one thing, and shareholders’ desire to make (more) money is another. According to a recent survey published by Reuters that draws on more than 4,400 participants (a small sample, I must admit), 12 percent of adult users said they had used someone else’s credentials to access Netflix or its direct competitors, and if we limit ourselves to the 18–24 demographic, the number rises to 21 percent. Why is this relevant now? Netflix will report its earnings today, and Wall Street analysts believe growth in earnings will fall from 31 percent this year to 19 percent in the same quarter next year.
The people at Quartz decided to do an additional calculation on Reuters' results and concluded that if half of that 12 percent had their own account, Netflix would get an extra $391 million. I am sure some investors will take note and look to apply pressure, because that corresponds to a positive annual change of 4.4 percent. Still, Netflix has not commented and is taking it very calmly. CFO David Wells said in September last year that while they could attack password sharing, they “wouldn't turn those people into subscribed users overnight”.
