Academy blog

Password Sharing: Friend or Foe?

Susan, a mother in Portland, signs up for a subscription-based, video-on-demand service (SVOD) for her family. The next month, her eldest son Tommy goes off to college in Chicago and takes the password with him. In his first week, Tommy shares the password with his roommate and his new friends down the hall. Soon Susan's family SVOD account is being used in ways explicitly prohibited by her contract with the SVOD provider and—according to a ruling in 2016 by a U.S. Ninth Circuit Court of Appeals—in direct violation of the Computer Fraud and Abuse Act.

And Tommy isn't an anomaly. In a recent survey of college students' viewing habits by consulting firm Parks Associates, more than two-thirds of respondents use someone else's password and they would simply stop watching if ever forced to pay. One surveyed student was blunt about it: "If [the shared password I use] dropped, I’d use a different friend’s password. There’s like an infinite number of passwords that I could use and not pay for it." Young adults generally are far more likely to share SVOD passwords. A Reuters/Ipsos poll from June 2017 shows that nearly a quarter of adults under 24 years of age use illegally shared passwords for streaming sites.

But is all this password sharing bad for business?

Reed Hastings of Netflix sees it as a net positive. At last year's CES, he explained, "As kids move on in their life, they like to have control of their life, and as they have an income, we see them separately subscribe. It really hasn’t been a problem." The numbers seem to bear this out: The same Reuters/Ipsos poll shows a steady decline in password-sharing as users get older.

One could speculate on the causes for the generational divide in password-sharing habits: 1) higher incomes among older adults, which would make subscription rates less daunting, 2) withering of college social circles where passwords might be shared, and 3) evolving social mores as one gets older, which make password sharing more of a taboo. On this last point, there is some debate: Do we develop a sense of responsibility to pay for content as we get older or is it simply that young adults now have an ingrained sense that sharing passwords is not immoral and they will carry this attitude into middle age?

For now, anyway, industry leaders seem to agree that password sharing often helps SVOD providers more than it hurts as it winds up being a powerful marketing vehicle. On the other hand, media providers such as The New York Times and the Wall Street Journal have seen startling jumps in revenue after cracking down on free-riders, with the latter reporting an 86% jump in paid subscribers after closing off a leak in its paywall.

For a content provider of any kind, determining whether free-riders and password-sharers are good or bad for business is a matter of debate. But what is not in doubt is that SVOD providers must arm themselves with solid and thorough data on just who is using their services and how they are using them if they want to make decisions that will maximize revenue in the short and long term.

NPAW's YOUBORA Infinity empowers SVOD providers with the data they need. Its robust tools for spotting password sharing across multiple geo locations, devices and IPs can be configured to match a provider's business strategy. Its ability to dive into contextualized data on consumer behavior—now including password sharing—is a goldmine for marketing departments looking to expand customer acquisitions, for customer service departments validating complaints and looking to improve retention rates, and for technical teams wanting to improve user authentication methods.

With YOUBORA Infinity, decision makers at SVOD providers are now armed with essential data on where, when and how its subscribers are using—and perhaps abusing—their services.

Research & Editorial Team on October 05th 2017

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