Netflix’s password sharing crackdown is delivering

Netflix’s efforts to limit password and account sharing appear to be helping, according to an Internet-Delivered TV Services report from Leichtman Research Group.

The streaming giant began cracking down on password sharing in October 2023 in the U.S. It had been piloting similar methods in other parts of the world before that.

When the streamer detects a possible instance of password sharing, it could require users to confirm their login in order to continue, after using a numerical code.

Netflix has also been steering users toward signing up for a discounted “extra user” rate of $7.99 per month, which represents a discount over the normal price. 

Consumers also have the option to transfer their entire login and viewing history to a completely separate, full price account.

According to LRG’s survey of 2,546 households, U.S. password sharing is down to about 10% of users. That figure has been declining slowly from 16% in 2018 to 14% in 2022 and 15% in 2022. 

The latest data shows a large drop in sharing accounts, though it’s important to note the figures are based on users self-reporting password sharing.

Password sharing is one of the biggest challenges facing streamers. For years, the issue was largely a “best kept secret” — everyone knew it was happening but largely ignored it. In at least some instances, password sharing may have actually helped streamers grow in popularity if not revenue.

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However, as the space tightened and production and licensing costs increased, streamers became increasingly pressured to deliver revenue and profits, which means collecting subscription fees from larger numbers of people.

Other streamers have been watching Netflix’s various password-sharing cutdown efforts and both Disney+ and Max have announced they will be making the issue a priority in the near future.

Going back to the data, LRG also reports that 10% of DTC video services are shared outside an immediate household, compared to 12% in 2022, according to its survey data. 73% of all these types of service are reported as being used by only members of a single household. 

Younger viewers, however, are more likely to use an account paid for in full by someone else — an estimated 17% for users ages 18 to 35. For people over 35, that figure dips to 7%.=;

However, the likelihood that an individual shares the service increases among younger consumers, with 17% of all DTC services for the 18-35 age group fully paid for by somebody else, compared to just 7% for those in the 35+ demographic.

Meanwhile, streamers are also exploring other forms of revenue. Many have rolled out lower-priced tiers in exchange for showing users ads — and some have actually found this can generate more revenue than the different in subscription price between the two tiers.

There are also a variety of standalone FAST services that rely entirely on ad revenue.