Survey: Efforts to Curb Password Sharing Should Lead to Influx of New Subscribers for Netflix, Other Streamers

Password sharing is an issue every streaming service must deal with. As inflation continues to grip the world economy, users are more willing than ever to send a friend or family member their log-in information, and many services are in the process of determining the best ways to curtail such practices.

Those that do go ahead with a password-sharing crackdown may not see that many user defections if they do so, according to a new study from market research firm Horowitz Research. The survey indicates that companies like Netflix — which is set to roll out new anti-password sharing measures in 2023 — could see significant gains when they do.

Horowitz’s survey found that around one in three Netflix users are sharing log-in information, and around one in four Prime Video users do as well. Numbers at other big streamers like Disney+, Hulu, and Paramount+ are roughly equivalent, according to the study.

The research shows that 71% of password-sharers on Netflix would be willing to pay the full subscription cost if they were forced to discontinue sharing log-in information. Password-sharers on HBO Max, Prime Video, and all of the other major streaming services report their willingness to pay full price at a rate of 43% or higher.

Notably, the study shows that the lower the penetration of the service, the more likely it is that users are sharing passwords. For example, 11% of consumers surveyed have SHOWTIME, and a full 60% of SHOWTIME subscribers share their passwords, as do 51% of Britbox and 47% of STARZ users; both fairly niche services in the larger streaming ecosystem.

The key to retaining users after launching efforts to stop password sharing is perceived value. For example, 83% of Netflix users and 81% of Prime Video customers think that the respective services offer excellent value for the money, compared to 63% of Showtime and 60% of Britbox subscribers.

“Netflix and Amazon Prime Video have long proven their value for the money to their subscribers, Netflix because of its extensive library of both syndicated and original content, and APV with its tie-in to other Amazon Prime benefits,” notes Horowitz executive Adriana Waterston. “As such, while Netflix’s crackdown on password sharing will likely lead to subscriber loss, the majority of subscribers will stay with the service. However, Netflix will need to keep its perceived value high in order for consumers to continue to justify the investment.”

That need to keep perceived value high is where Netflix’s ad-supported price tier might come in. Offering users an on-demand library as expansive as Netflix’s at $6.99 per month, a price point lower than any other ad-supported video-on-demand (AVOD) tier currently on the market, is a great way to convince users now sharing a password to pay up when the time comes. Such a move would also help Netflix’s “Basic With Ads” plan gain more traction, which it appears to be lacking for now.

Other services looking to put a halt to password sharing must find ways to demonstrate the value of their service when doing so. There are myriad ways for streamers to demonstrate their value, such as with new content or unique user interface features. Proving to current passwords-sharing users that a service is worth paying for could bring in large numbers of new paid subscribers, which every streamer needs as they look to enhance their profitability.