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10% of Netflix Users Are Still Borrowing Someone Else’s Password — Study

Netflix’s password-sharing crackdown is working. Well, it is and maybe it isn’t.

According to a new study of more than 2,500 U.S. households performed by Leichtman Research Group (LRG), 10 percent of Netflix users are still borrowing the service. If that feels low, it is — according to recent history, at least. In 2022, LRG found that 15 percent of Netflix users were borrowing someone else’s paid account; the rate was 14 percent in 2020 and 16 percent in 2018.

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Ten percent starts to feel less small when you do the math. Netflix has 260 million global paid users, which (basically) means that 26 million users are still not being monetized. Assuming they should be paying at least $7.99/month apiece — the going rate to share with an outsider — that’s $200 million-plus in monthly revenue not being collected.

A Netflix rep did not immediately respond to IndieWire’s request for comment on LRG’s findings.

No wonder Disney+, Hulu, Max, and certainly others are or will be following suit to block outside-the-home access to their platforms. Netflix’s “paid-sharing” (it’s internal, kinder term for the sting operation) started as a trial in Latin America before migrating to Canada. By May 2023 it had been rolled out in the U.S. and more than 100 other countries. It would go global that summer.

In that April-June 2023 quarter, the streamer added 5.9 million global paid subscribers, an eight percent improvement from the same three-month period in 2023. And that was with (a little less than) half-a-quarter of meaningful paid sharing.

In its first two full quarters following the large-scale rollout, Netflix added 8.8 million global subscribers (Q3, +10.8 percent) and 13.1 million (Q4, +12.8 percent), respectively. The fourth-quarter growth was Netflix’s best ever for October-December.

Netflix’s January 23, 2024 letter to shareholders read, in part: “Our healthy top line growth reflects the benefits of paid sharing, our recent price changes and the strength of our underlying business driven by a strong slate.”

Yeah, paid sharing was number one — ads weren’t even mentioned.

“At this stage, paid sharing is our normal course of business — creating a much bigger base from which we can grow and enabling us to more effectively penetrate the near term addressable market of ~500M connected TV households (excluding China and Russia), which should increase over time as broadband penetration rises,” the letter read.

Busy Philipps, Renée Elise Goldsberry, Sara Bareilles, Paula Pell in “Girls5eva”
Busy Philipps, Renée Elise Goldsberry, Sara Bareilles, Paula Pell in “Girls5eva”

But that’s just one streaming-video service (though yes, it’s the biggest). Eighty-eight percent of U.S. households have at least one SVOD service, Leichtman found, and 53 percent have four or more DTC (direct-to-consumer) streaming video services. Most of them are appropriately used, but not all.

LRG found that 73 percent of all DTC services are fully paid for and are not shared with others outside the household. So, what about the other 27 percent?

Well, 4 percent are platforms that are freebies packaged with some other service. No theft there. Of the remaining 23 percent, 11 percent are used and paid for by those that also share them with someone outside the household, 10 percent are used in one household but are borrowed from another household that is paying for the service, and 2 percent are used by multiple households that share costs.

The younger you are, the more DTC services you likely have. Adults 18-44 average 5.1 DTC services; those 45-54 average 4 flat, and those ages 55 and older average 2.8.

Also the younger you are, the more DTC services you likely steal. Seventeen percent of the DTC services used by adults 18-34 are borrowed from someone else. For those age 35 and older, the rate is seven percent.

Ask Netflix: Streamers find 100 percent of the sharing to be 100 percent uncool.

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