How Streaming Apps Will Deal With Password Sharing

With streaming video becoming so vastly popular, millions of people are using services like Netflix and Hulu to watch their favorite shows. However, everybody isn't paying for it. The media companies are missing out on significant revenue because users are sharing their passwords with others.

In fact, more than one-fifth of the young adults who stream shows such as Stranger Things or Game of Thrones are borrowing someone else's password who doesn't live with them, according to Reuters. Another shocking statistic is that 21% of streaming viewers in the ages of 18 to 24 admitted to accessing video on services such as Netflix, HBO Now, or Hulu by using the log-in info from someone else not living in their household.

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Currently, the major streaming networks haven't come down hard on password-sharing. However, the analysts on Wall Street claim that the higher-ups may face pressure from investors to change course if the subscriptions don't continue to climb.

"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," Raymond James analyst Justin Patterson said.

For Netflix in particular, one analyst with I/B/E/S says that the revenue growth at Netflix is projected to drop from 31 percent in the second quarter of 2017 down to 19 percent in the second quarter of 2018, according to Channel News.

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"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," executive vice president of global distribution at HBO, Bernadette Aulestia said.

Netflix executives were of the opinion that toughening up on the issue wouldn't exactly show up in the bottom line.

"We could crack down on it," Netflix Chief Financial Officer David Wells said at a conference last year, "but you wouldn't turn all those folks to paid users."