Jan 10, 2020 - Technology

Sharing streaming passwords is more than a joke for Wall Street

Netflix logo on a phone screen

Photo: Omar Marques/SOPA Images/LightRocket via Getty Images

Netflix may have gone viral with a humorous tweet about password sharing this week, but Wall Street sees the practice as a drag on the company and its rivals to the tune of billions of dollars in revenue each year.

Why it matters: With competition growing and the cost of content continuing to increase, some streaming companies are likely to consider cracking down on the widespread practice.

Driving the news:

  • As my colleague Felix Salmon noted, Netflix India tweeted a picture of a scam promising free Netflix and suggested followers just share passwords like everyone else.
  • A new Parks Associates study estimates that password sharing cost streaming companies $9 billion last year, per Hollywood Reporter.

The big picture: In a way, Felix wrote, Netflix likes it when you use someone else's account. A paying customer is better than a non-paying customer, but a non-paying customer is better than no customer at all. And some password sharers can go on to become the next generation of paying customers.

  • In the platform wars, size, growth and brand recognition matter more than anything else. Particularly in a fast-growing market like India, the prime goal for Netflix is to get as many people attached to its platform as possible — whether they're paying or not.

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