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 Twenty-one percent of streaming viewers ages 18
to 24 said they had accessed at least one digital video service
such as Netflix Inc, HBO Now or Hulu by using log-in credentials
from someone outside their household at some time. Overall, 12
percent of adults said they did the same thing. (http://tmsnrt.rs/2sUQIYJ)
Subscription revenue is likely to come under scrutiny starting
next week when TV industry players begin reporting quarterly
earnings. Netflix, the dominant streaming service, releases its
results on Monday.
Up to now, Netflix and other streaming networks have accepted
some password-sharing, but they may face pressure from investors
to change course if new sign-ups slow substantially, Wall Street
analysts said. Revenue growth at Netflix is projected to drop
from 31 percent in this year's second quarter to 19 percent in
the second quarter of next year, according to Thomson Reuters
I/B/E/S.
"If Netflix goes from a 30 percent revenue growth story to a 10
percent story, there is absolutely going to be more focus on
their leaving money on the table," said Justin Patterson, an
analyst with Raymond James.
Netflix declined to comment.
Respondents to the Reuters/Ipsos survey said they borrow
passwords to save money on video subscriptions, which can be
cheap on their own but add up with multiple services.
Donielle Bradshaw, a live-in nanny in Smyrna, Georgia, said she
uses her 28-year-old sister’s password for Hulu, and her
32-year-old brother’s password for Netflix.
"I feel like since we are family, it’s OK," said the 22-year-old
Bradshaw, who estimates she watches four hours of shows on
weeknights and 10 hours a day on weekends.
If companies cracked down on password sharing, Bradshaw said she
would be willing to pay for her own Netflix subscription but is
not sure about Hulu, which is owned by several media companies.
"I binge a lot of shows on Netflix. I don’t think I could do
without it," she said.
Companies say they accept some sharing as a way to promote their
programming to potential customers, but they also take steps to
curtail blatant freeloading.
Many networks limit the number of people who can watch
programming at the same time. Netflix, for example, allows two
to four simultaneous streams per subscription, depending on the
plan, and charges more for the higher number of streams.
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HBO, a unit of Time Warner Inc, actually encourages younger viewers
to use its HBO Now and HBO Go services for free by offering it to
about 100 U.S. colleges and universities.
"For us it’s more important that at that age where they are not
financially independent quite yet, they are habituating to using the
product to ultimately aspiring to becoming paid customers,"
Bernadette Aulestia, executive vice president of global
distribution, said in an interview.
Netflix executives also have said they know some viewers share
passwords.
"We could crack down on it, but you wouldn't suddenly turn all those
folks to paid users," Netflix Chief Financial Officer David Wells
said at a Goldman Sachs conference last September.
MISSING A CHANCE
Industry analysts say companies are missing a chance to grow
revenue. An analysis by Parks Associates estimated streaming
providers will lose $550 million in 2019 from password sharing.
"There has been this kind of cavalier attitude about it," Parks
Associates analyst Glenn Hower said. "It hasn't been a priority."
Companies could crack down if they want. Cisco Systems Inc, for
example, sells products that can detect abnormal activity on an
account such as an unusual time or place, said Conrad Clemson,
Cisco's senior vice president and general manager of service
provider platforms and applications.
Cisco's customers, which include streaming services and pay TV
distributors, decide whether to use the information simply for
monitoring or take additional steps such as sending a warning to
account holders or shutting down an account, he said.
"A lot of service providers and content providers are very much in
the experimental phase right now," he said.
Streaming providers say they do track account use but have provided
few specifics.
The Reuters/Ipsos poll was conducted online in English throughout
the United States from June 8 to June 26. It gathered responses from
4,453 adults, including 3,557 people who said they streamed video
from their cable TV provider or from standalone services like Amazon
Prime, Hulu or Netflix. The poll has a credibility interval, a
measure of accuracy, of 2 percentage points.
(Reporting by Lisa Richwine in Los Angeles and Jessica Toonkel and
Chris Kahn in New York; Editing by Sue Horton and Lisa Shumaker)
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