More than a quarter of British Netflix subscribers allow their friends and family to use their accounts, with at least 17m homes estimated to be password sharing across the embattled streaming platform’s biggest markets in Europe.
Netflix announced plans to crack down on the practice as one of a number of strategic moves designed to stem investor panic after it had more than $60bn (£47bn) wiped off its market value last week when it reported its first loss of subscribers in a decade.
The world’s biggest streaming service, which expects its 221 million global subscriber base to shrink by millions more when it reports its next set of results covering April to June, has estimated that about 100m homes that pay for its service globally share their passwords with others.
In the UK at least 27% of Netflix’s estimated 14.9 million subscribers, more than 4m accounts, allow other households to use their accounts to watch shows from Bridgerton to Stranger Things for free, according to the research firm Digital i, which said the true figure is almost certainly higher.
“Our estimates came from analysing account activity, and we corroborated this with various other sources,” said Ali Vahdati, the Digital i chief executive. “That said, we still believe our results to slightly underestimate the [actual] incidence of password sharing.”
Its analysis revealed that account sharing is most prevalent among younger Netflix fans, with at least 29% of 18- to 24-year-old UK subscribers doing so. This compares with a more moderate 18% of 45- to 54-year-olds.
The research found that in Netflix’s five biggest European markets – the UK, Germany, Spain, France and Italy – a “minimum” of 17 million subscriber households share their passwords. The Spanish have proved to be the most prolific sharers, at 47% of subscribers, followed by Germany (42%), France (35%) and Italy (33%). The UK, Netflix’s biggest European market by some distance, has the lowest level of password sharing of the five.
A decade of barnstorming growth had previously led Netflix to take a lenient approach to password sharing, with the company’s co-founder and co-chief executive Reed Hastings stating it had “no plans” to crack down on the practice.
“Password sharing is something you have to learn to live with because there’s so much legitimate password sharing, like you sharing with your spouse, with your kids,” he said, speaking in 2016. “So there’s no bright line, and we’re doing fine as is.”
However, a combination of Netflix nearing saturation in many of its biggest markets, rising competition from rivals such as Amazon and Disney+ and a string of price increases has put pressure on the company’s growth, prompting the management to change its tune.
“When we were growing fast [password sharing] was not a high priority, but now we’re working super hard on it,” Hastings said at the company’s financial update last week.
Last month, Netflix began a trial charging subscribers in Chile, Costa Rica and Peru – password sharing is particularly high in Latin America – $2 to $3 a month to add up to two extra profiles outside their household to their account.
The UK streaming boom ground to a halt in the first quarter this year. Last week, research from Kantar showed that the number of UK homes that have at least one paid-for subscription streaming service fell by 215,000, ending a decade of uninterrupted growth as households cut budgets to cope with the cost of living crisis.
The research found that the proportion of consumers planning to cancel at least one video streaming service stating the reason as “wanting to save money” has hit an all-time high of 38%.
