According to Hub’s TV Churn Tracker, 25% of TV viewers in the U.S. admit to using an SVOD with someone else’s credentials. In response to this epidemic, Netflix was the first major streamer to come down on password sharing last year and Hulu’s password crackdown began in March. Soon to follow will be Max, expected to begin its password enforcement this fall and Disney, starting “in earnest” in September.
And so far, the results of the Hub TV Churn Tracker show the enforcement efforts appear to have had an effect on password sharing, resulting in a modest downward trend.
Hub’s research found viewers who use others’ passwords are more likely to be younger, non-white and have kids. As noted in previous Hub reports, the sharers’ demographic profile suggest they are viewers who care a lot about TV, and avail themselves of a number of sources.
Password sharers are actually paying for a lot of subscriptions. It is a mistake to assume people who use another’s SVOD password do it because they are reluctant to pay for TV. When it comes to paid subscriptions, more than 4 in 10 of this segment pay for a hefty 6 or more TV services. And among MVPD and vMVPD subscribers, the password sharers are also much heavier users of premium cable channels. In fact, they are heavier users of nearly all sources of TV, both paid and free, compared to those who do not share passwords.
The password sharing viewers are more than 3 times as likely to add or cancel TV services in a typical month, compared with those who do not share. And there is strong evidence the password sharers are “serial churners" -- 2 out of 3 who added a subscription were returning to a service they subscribed to in the past.
As always, content is a driver of additions and cancellations, but for password sharers, it is also about cost. The top reasons for password sharing consumers to add a TV service are specific content, as well as amount of content. But subscription costs were cited nearly as often as a driver of sign-ups.
With revenue growth virtually assured for major streamers like Netflix and Disney+, services could afford to ignore rampant password sharing; Netflix even encouraged sharing, treating it as a marketing tool. The evidence from the TV Churn Tracker suggests the gains will be incremental, not substantial. The challenge is the password sharers profile as quintessential serial subscription churners – young consumers who have a lot of TV subscriptions already, and are looking for value. So when they do subscribe to a service, it is likely they will not stay with it very long.
The sharers are already maxed out on their TV spending, and if they add a service, they will be dropping another one to do so. The one bright spot for the streamers is most of these consumers return to services they have canceled, if the content attracts them.
With SVODs under pressure to deliver profitability and manage production costs, password enforcement is an imperative, even if it delivers only incremental revenue.