Streaming services like Netflix are requesting that you stop passing around your password
Streaming services like Disney+, Netflix, Amazon and others are asking you to stop sharing your password. According to the Associated Press (AP), apps that stream music, video, and other services are losing several billion dollars a year in revenue thanks to those who share their passwords with others. The AP notes that this might not seem like a huge amount for an industry that reports profits in the neighborhood of $120 billion each year, but the costs of developing new programming is getting expensive.
Streaming services want you to stop sharing your password with others
Consider that Amazon will be spending $450 million for the first season of its "Lord of the Rings" series, four times the amount that HBO paid for a season of "Game of Thrones." Tuna Amobi, who works as an analyst for research firm CFRA says, "Frankly the industry has been gravitating toward that. It’s a question of when, not if. The landscape seems to be pretty set in terms of these new entrants, so it seems like a good time to get a much better handle on subscribers."
Disney+ has Netflix a little concerned
The streamers have to find the perfect balance. Sure, some offer tiers of service that encourage (or at least not discourage) sharing passwords. Getting tougher on password sharing might help some of the streaming firms bring in some extra revenue as those sharing a password decide to get their own subscription. On the other hand, getting too tough could turn away some users.
A few months ago, Netflix sent popups asking users to verify their accounts by tapping in a code sent via email or text. But Netflix did allow those verifying their account to do so later. CFRA's Amobi said about Netflix, "They’ll be taking a very cautious approach to it. Handled the wrong way, there’s always a downside to a move like this."
Netflix might not have been so concerned in the past about subscribers sharing their passwords. But now the world's largest video streaming service is facing competition from Disney+, which has half the number of global subscribers that Netflix has racked up but in only two years. Netflix co-CEO Reed Hastings said during a conference call last month, "We would never roll something out that feels like ‘turning the screws,’” Hastings said in an April call with analysts. “It’s got to feel like it makes sense to consumers that they understand.”
Netflix continues to increase content spending
Amobi points out, "Programming spend is doubling, or in some cases tripling and quadrupling, so you have to fund it somewhere. Most services are looking at losses for the next few years before they break even. So they can use every subscription that they can get."
Josh Galassi, a 30 year old in Seattle who works in public relations says that everyone he knows shares passwords as does he. "One rule I have is I only share passwords with close friends or family members," Galassi said. "Or somebody I know that has a service I don’t want to pay for, I’ll ask them if they’re willing to share in exchange for something that I pay for."
CFRA's Amobi explains exactly how the rise in production costs is putting pressure on top streamers to curtail the sharing of passwords. "Programming spend is doubling, or in some cases tripling and quadrupling, so you have to fund it somewhere. Most services are looking at losses for the next few years before they break even. So they can use every subscription that they can get."
Besides trying to add more subscribers, some streamers are trying to raise their top line by hiking prices. Last October, Netflix rose its most popular pricing tier by $1 per month to $14 while this past March, Disney did the same thing by tacking on an additional $1 per month to $8.
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