I remember just a handful of years ago sitting at my first-ever CES listening to Netflix CEO Reed Hastings talk about the well-known phenomenon of password sharing among the company’s millions of users. It’s a “problem” that the company has done little about because, as Hastings put it, it’s also one of their best (and cheapest) marketing tools.
Password sharing is like the gateway drug to streaming media services. Once you’ve been given a little access to the sweet elixir that is thousands of hours of bingeable content, you’re going to want more. And as soon as that access gets cut off—likely because your source has let their own account lapse—you’re going to want to get your own account so you can keep up with the latest original series.
For providers like Netflix, password sharing has done plenty of good over the years. But there’s still the potential for lost revenue there. And, in fact, new research shared by Synamedia—which calls themselves the largest independent video software provider—at CES 2019 showed that 26 percent of millennials share passwords for streaming services. That number, the company said, adds up to more than $11 billion in potential revenue loss for pay-TV ($9.9 billion) and OTT ($1.2 billion) services.
Because of that finding, and in order to help providers recapture that lost revenue, Synamedia introduced a new service called Credentials Sharing Insight. The service, which debuted at CES 2019, will reportedly give Synamedia customers—which include pay-TV operators—the ability to limit the amount of password sharing and charge customers to upgrade their accounts to allow for more concurrent users to access their account.
“Casual credentials sharing is becoming too expensive to ignore,” Jean Marc Racine, CPO and GM EMEA of Synamedia, said in a statement. “Our new solution gives operators the ability to take action. Many casual users will be happy to pay an additional fee for a premium, shared service with a greater number of concurrent users. It’s a great way to keep honest people honest while benefiting from an incremental revenue stream.”
The company provided little insight as to who their potential customers might be, only saying that the service is currently being deployed on a trial basis with a number of pay-TV operators. So, what it sound like right now is that someone like a Charter or Comcast may be willing to deploy this service (to help stem the bleeding from cord cutting), though the service could also be employed by a Netflix or Hulu if they felt they were hurting bad enough because of the password-sharing practice.