Newsletter 17th of March: Password Sharing – A Costly Business

NEWSLETTER

17 March 2021

Until very recently, password sharing has not really been an issue – at least not publicly. However, this seems to have changed last week as Netflix raised the subject on password sharing for its’ SVOD service. This coincides with a maturing market and fewer households left to sign up. And, of course, with fierce competition over stacking households. Mediavision has looked at how widespread this phenomenon is in the Nordics, as well as its consequences.

Last week, Netflix initiated a test to combat password sharing. Users reported seeing a screen saying, “If you don’t live with the owner of this account, you need your own account to keep watching”. In the trial, users had to verify the account by a specific code (sent to the subscriber via text or email). To no surprise, with a maturing market and flattening growth, most actors will analyse stricter password sharing policies as a potential revenue source.

So, how severe is this issue in the Nordics? Mediavision figures tell quite a grim story from the actors’ perspective. Looking at all SVOD services, across all Nordic countries, up to 40% admit to sharing a password to a standalone SVOD service with someone outside the household. Shared passwords are especially common among the young, as high as up to 60% among 15-24. Sharing also clearly increases with stacking – the higher stacking, the more sharing.

Zooming in specifically on Netflix, the service seems to be representative of the general password sharing in the Nordics – with approximately 40% of subscribing households sharing passwords outside the household.

Just to further enlighten the magnitude: If all Nordic households sharing an SVOD service instead were to pay, approximately an additional EUR 250 million would (theoretically) have been added to total revenues for the full year 2020. On the other hand, it could well be argued that sharing has been one of the reasons for the very quick transformation of the market by (unintentionally) enabling additional potential subscribers ease of access, and thereby increasing awareness. So far this seems to have served actors very well. But times they are a changing?

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