Can you cut cable's cord?
It’s no secret that streaming TV and movies services like Netflix, HBO Go and Showtime Anytime have a lot of viewers who aren’t paying customers. They’re “sharing” the login credentials of friends and family who are cable subscribers.
For the most part, these media companies have looked the other way. In HBO’s case, one executive even chalked it up to marketing. For the most part, no one’s been able to quantify just how much that “marketing” is costing the streaming industry – until now.
Variety reports that research firm Parks Associates believes Netflix, HBO and others are leaving as much as $500 million on the table this year by not putting the hammer down on password sharing.
…About 6% of U.S. broadband households use an over-the-top video service paid by someone living outside of the household, the firm estimated. Unauthorized password-sharing is most rampant among consumers 18-24, with 20% of OTT users in that age bracket binge-watching on someone else’s dime, Parks says. The data is based on a consumer survey of 10,000 U.S. broadband households conducted in Q3 2014.
Indeed, it’s younger TV watchers – most likely “cord nevers” who have yet to subscribe to cable and probably never will – who are the primary offenders. The older you are, the less likely you are to pirate video-on-demand services this way.
Of course, for a long time those without cable had no choice but pirate if they wanted to watch “Game of Thrones”, because cable channels like HBO didn’t offer standalone services. That’s changed dramatically this year, with the launch of HBO Now; Showtime’s new streaming service; and Sling TV, which bundles popular cable networks like AMC, A&E, ESPN, CNN and TNT. It’s easy to go legit, if you’re honest enough to shell out the cash for these new offerings. As I wrote earlier, it’s a question of ethics.
Now that the cable channels have stepped up with standalone services, why haven’t they started to crack down on password leeches? Variety writer Todd Spangler says it’s because doing so would add a layer of complexity that would annoy legitimate subscribers:
The real problem is, SVOD providers really can’t block unauthorized users if they have a legit password without instituting an additional form of authentication. Netflix and HBO want to make it as easy as possible to watch their streaming services; if they started asking for your mother’s maiden name or some other proof you’re entitled to the goods, customers would get irritated.
Look, HBO is not going to require a fingerprint scan or Social Security number before you can watch the latest “True Detective” episode. SVOD services could do heavy two-factor authentication for a preset number of devices per account, but again, that would stunt users’ ability to stream on any Internet-connected thing with a screen (e.g., from your in-laws’ smart TV on Thanksgiving).
Spangler points out that the services do limit the number of streams, and Netflix has instituted a family-plan option that provides more streams for additional cost. But as long as the streaming services are in market-share-building mode, you can expect them to turn a blind eye to password sharing, even though it may be costing then significant dollars.
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