Because there’s no real limit on how many devices that a Netflix account can be accessed from non-simultaneously, it’s not a big deal to share your password with a friend, right? The millions of people enjoying premium, free video content on streaming services by using shared passwords seem to think it’s an OK practice.
Netflix recently announced it is raising its price from $8.99 to $9.99 a month for the plan that allows more than one device to stream content at the same time. This news was negatively received from many binge-watchers, but Goldman Sachs analyst Heath Terry suggests that password sharing may be the root problem.
“We believe a targeted price change like this is designed to reduce excessive password sharing by incentivizing users to switch to the one-screen plan,” Terry wrote in a note to investors.
The single screen plan costs $7.99 per month. Despite this insight, Netflix and HBO executives deny that password sharing is an issue to their companies.
A Netflix spokesperson said, in an email to MarketWatch, that it doesn’t keep track of the revenue lost to password sharing. However, the terms and conditions on the website strongly warn against the practice.
Glenn Hower, a research analyst at Parks Associates, says that in a multibillion dollar industry, password sharing is “not quite as big of a deal as it could be.” He suggests that the industry will probably lose about $500 million in 2015 to password sharing. Hower calls the act of password sharing “piracy lite.”
Although some may not take the practice of password sharing too seriously, that’s not the case everywhere. In Tennessee, for example, it is outlawed under a web entertainment theft law passed in 2011. Anyone caught sharing their logins could face a year in jail or a fine of $2,500.