Study: Password crackdown may boost SVoD revenues
January 18, 2023
By Colin Mann
As Netflix cracks down on password sharing, a study by Horowitz Research suggests that the decision may not spell doom and gloom for the service. Horowitz’s State of OTA 2022 report found that seven out of 10 Netflix users who password share would be willing to pay full price for the service if they could no longer share access.
In an earlier 2022 study (State of Viewing & Streaming 2022), Horowitz found that the average streamer uses 7.1 streaming services in a typical month—4.3 of which are subscription services. The average streamer now pays $75.8 (€68.82) a month for their streaming services, up from $49.3 reported in 2021, according to the firm’s State of Pay TV, OTT, and SVOD 2022 study.
With so many SVoD services now available and considering the rising costs to subscribe, the new Horowitz State of OTA 2022 report confirms that SVoD users are increasingly engaging in the practice of sharing passwords with others in order to offset costs. There is some degree of log-in/cost sharing across all the subscription streaming services tested in the latest survey. For example, 18 per cent of TV content viewers share access to Netflix while 42 per cent pay for the service themselves; 15 per cent share access to Prime Video with 44 per cent paying for the service themselves. This translates to about one in three Netflix users and one in four Amazon Prime Video users sharing access to those services. The numbers are similar among users of other popular services such as Hulu, Disney+ and Paramount+.
Notably, the study shows that the lower the penetration of the service, the more likely it is that users are sharing passwords. For example, 11 per cent of consumers surveyed have Showtime Now, and a full 60 per cent of Showtime Now subscribers share their passwords, as do 51 per cent of BritBox and 47 per cent of Starz users.
The more valuable the service is perceived to be, the less likely it is that consumers will share their passwords. For example, 83 per cent of Netflix users and 81 per cent of Prime Video users think the respective services offer excellent value for the money, compared to 63 per cent of Showtime Now users and 60 per cent of BritBox users who feel that way about those services.
“Netflix and Amazon Prime Video have long proven their value for the money to their subscribers, Netflix because of its extensive library of both syndicated and original content, and APV with its tie-in to other Amazon Prime benefits,” notes Adriana Waterston, Chief Revenue Officer and Insights & Strategy Lead for Horowitz Research. “As such, while Netflix’s crackdown on password sharing will likely lead to subscriber loss, the majority of subscribers will stay with the service. However, Netflix will need to keep its perceived value high in order for consumers to continue to justify the investment. This will certainly be a challenge for Netflix moving forward as their programming costs continue to increase and as they add commercials. Also, other services considering a similar crackdown will need to justify this move by finding ways to add value to their services, making them stickier for consumers.”