As Netflix cracks down on password sharing, a new study by Horowitz Research suggests that the decision may not spell doom and gloom for the service. Horowitz’s latest “State of OTA 2022” report, released late in 2022, found that 7 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, 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 US$75.8 a month for their streaming services, up from US$49.3 reported in 2021, according to the firm’s “State of Pay TV, OTT, and SVOD 2022” study.
With so many subscription streaming 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.
However, there is some degree of log-in/cost sharing across all the subscription streaming services tested in the latest survey. For example, 18% of TV content viewers share access to Netflix while 42% pay for the service themselves; and 15% share access to Prime Video with 44% paying for the service themselves. This translates to about 1 in 3 Netflix users and 1 in 4 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% of consumers surveyed have Showtime Now, and a full 60% of Showtime Now subscribers share their passwords, as do 51% of Britbox and 47% 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% of Netflix users and 81% of Prime Video users think the respective services offer excellent value for the money, compared to 63% of Showtime Now users and 60% of Britbox users who feel that way about those services.
“Netflix and 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 Prime Video with its tie-in to other Amazon Prime benefits. 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,” noted Adriana Waterston, Chief Revenue Officer and Insights & Strategy Lead for Horowitz Research.
“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,” Waterston added.