Netflix loses $6 billion every year in revenue due to password sharing, says analyst

Netflix is one of the largest video-streaming platforms with around 203.66 million paid subscribers. With an extensive list of contents across genres, the organisation caters to several audiences around the world with an option to navigate its app or website in more than 20 languages. However, one of the most popular interfaces enabled by the entertainment streaming platform to the users is the ability to share passwords with people. However, recently Netflix has specifically asked sub-users to stop using the app if they do not live with the owner of the Netflix account. 

Is password sharing a curse to Netflix's business?

While users enjoy the intriguing content on Netflix, the organisation is losing $6 billion every year which is quite huge. According to Jason Bazinet, a Citi Equity Analyst, US-based streaming companies lose around $25 million every year due to the password-sharing interface. He also mentioned that Netflix itself has a 25 per cent market share over the worldwide OTT business. Other than this, Bank of America recently published a note implying that a “substantial percentage” of paid subscribers are using the password sharing interface by giving credentials to friends, family, and relatives who do not live in the same house.

This also brings us back to when Netflix sent out an in-app notification saying that: “If you don’t live with the owner of this account, you need your own account to keep watching”. Through this, the organisation is said to have been testing a form of two-factor authentication. Meaning, if you are authorised by the Netflix paid subscriber for using his/her account then all you need to do is go to an option to get a code emailed or texted to the account owner. Now, ask your friend, relative or family member to share the code with you, and that's all. By following this you can continue watching Netflix without any issues.

As this growing threat keeps generating losses to OTT platforms, it won't be long when streaming media giants will imply paid subscribers to stop sharing passwords with distant friends and relatives. Currently, Netflix allows users to have five profiles in a single account. Each profile offers personalised results depending on the choice of genre and entertainment.