Is Netflix Password Sharing An Even Bigger Problem Than People Thought?

Netflix has been saying for years that password sharing—when someone without a NetflixNFLX
account uses a friend or family member’s account to access the streamer’s content—is a problem. During this week’s earnings call, the company outlined a new plan to crack down on password sharing.

It claims that 100 million households worldwide, and 30 million in North America, are sharing passwords, but it also made that claim while sustaining its first decline in subscribers in a decade and fighting a rush of new competitors. So whether it was actually that big a problem (or an easy-to-grab excuse) has been somewhat unclear.

The answer seems to be that password sharing is a problem, perhaps to even more of an extent than Netflix indicates. A new study from Attest, a consumer research platform that tracks consumer behavior across multiple media, including streaming, finds that more than one in five people surveyed rely on a Netflix account paid for by another person.

The data said 22.6% engage in password sharing. If you extrapolate that to just the U.S. population, that’s more than double the 30 million Netflix indicated.

During this week’s earnings call, Netflix said it would force those in North America who share passwords with another person to create subaccounts under the account owner’s name and pay a fee to share in the services. Netflix has not said what that fee will be yet, but it has been testing the plan in Latin America.

Questions Remain About The Crackdown

So will those people actually pay to watch Netflix content? While in the short term, the streamer is losing money on them, it may have an advantage in the long run. At this point, these people have engaged with the company’s content and may have some favorite shows.

If, for instance, they are diehard Stranger Things fans, then presumably they’ll want to subscribe to catch the next season, whereas someone who hasn’t watched Things doesn’t know what they’re missing and has less incentive to subscribe.

The Attest report also uncovered more interesting consumer reaction to Netflix. About 17 percent of Netflix subscribers said they won’t switch to a new ad-supported tier, details of which were revealed last week. The survey was taken before those details came out, and Netflix seems to have hit the right spot with its $6.99 per month price point. A quarter of respondents said they’d be willing to pay that or more for the service.