Netflix’s potential plans to crack down on password sharing could impact a large portion of the streaming service’s audience, according to a recent consumer survey.
Leichtman Research Group surveyed more than 4,000 U.S. households and found that 33% of them share Netflix with people outside their home. Within that figure, 15% of consumers pay for Netflix and share them with someone outside the household; 15% of consumers use Netflix services that are borrowed from another household that is paying for the service; and 3% of consumers are using a Netflix account and sharing the cost among multiple households.
Among the other respondents, 64% pay for Netflix and don’t share it outside their household and 3% don’t pay for Netflix because it’s provided for free as part of a promotion like T-Mobile’s Netflix On Us.
“Password sharing is an inherent feature of most streaming services. Sharing helps to expand the user base and retain customers, but it also creates a gap between the number of households that have a service and actual paying subscribers,” said Bruce Leichtman, president and principal analyst for Leichtman Research Group, in a statement. “For example, about two-thirds of U.S. households report having Netflix, but this includes about 10% of U.S. households that don’t pay for the service because it is borrowed from someone else’s subscription.”
Netflix has yet to fully expand its test of additional fees for accounts sharing passwords outside the home—and it may not—but some media analysts have suggested such a move could yield significant increases in revenue. According to estimates by Cowen & Co. analysts, the company could generate an incremental $1.6 billion in annual revenue by rolling out the program globally.
Earlier this month, Netflix said it would be begin testing features for its members in Chile, Costa Rica and Peru. Users sharing passwords with people outside the household would be prompted to add subscriber accounts for up to two people they don’t live with—each with their own profile, personalized recommendations, login and password—at a lower price: 2,380 CLP in Chile, 2.99 USD in Costa Rica and 7.9 PEN in Peru.
“We’ve always made it easy for people who live together to share their Netflix account, with features like separate profiles and multiple streams in our Standard and Premium plans. While these have been hugely popular, they have also created some confusion about when and how Netflix can be shared. As a result, accounts are being shared between households - impacting our ability to invest in great new TV and films for our members,” wrote Chengyi Long, director of product innovation at Netflix, in a blog post.
Netflix said it will “work on understanding the utility” of the new features before making changes anywhere else in the world.