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Password sharing affecting streaming revenue


REUTERS

Password sharing affecting streaming revenue

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MORE THAN ONE-FIFTH of young adults who stream shows like Game of Thrones or Stranger Things borrow passwords from people who do not live with them, according to a Reuters/Ipsos poll, a finding that suggests media companies are missing out on significant revenue as digital viewership explodes.

Twenty-one per cent of streaming viewers ages 18 to 24 said they had accessed at least one digital video service such as Netflix Inc, HBO Now or Hulu by using log-in credentials from someone outside their household at some time. Overall, 12 per cent of adults said they did the same thing.

Subscription revenue is likely to come under scrutiny starting next week when TV industry players begin reporting quarterly earnings. Netflix, the dominant streaming service, releases its results on Monday.

Up to now, Netflix and other streaming networks have accepted some password-sharing, but they may face pressure from investors to change course if new sign-ups slow substantially, Wall Street analysts said. Revenue growth at Netflix is projected to drop from 31 per cent in this year’s second quarter to 19 per cent in the second quarter of next year, according to Thomson Reuters I/B/E/S.

“If Netflix goes from a 30 per cent revenue growth story to a 10 per cent story, there is absolutely going to be more focus on their leaving money on the table,” said Justin Patterson, an analyst with Raymond James.

Netflix declined to comment.

Respondents to the Reuters/Ipsos survey said they borrow passwords to save money on video subscriptions, which can be cheap on their own but add up with multiple services.

Donielle Bradshaw, a live-in nanny in Smyrna, Georgia, said she uses her 28-year-old sister’s password for Hulu, and her 32-year-old brother’s password for Netflix.

“I feel like since we are family, it’s OK,” said the 22-year-old Bradshaw, who estimates she watches four hours of shows on weeknights and 10 hours a day on weekends.

If companies cracked down on password sharing, Bradshaw said she would be willing to pay for her own Netflix subscription but is not sure about Hulu, which is owned by several media companies.

“I binge a lot of shows on Netflix. I don’t think I could do without it,” she said.

Companies say they accept some sharing as a way to promote their programming to potential customers, but they also take steps to curtail blatant freeloading. (Reuters)

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