Password Sharing: Are Netflix, HBO Missing $500 Million by Not Cracking Down?

Netflix, HBO and other Internet video-subscription providers are theoretically leaving megabucks on the table from customers nefariously sharing login info with nonpaying users. So why aren’t they aggressively trying to block the millions of freeloaders gorging on “Game of Thrones” or “Orange Is the New Black”? Illicit password-sharing would appear to be a serious issue for subscription video-on-demand (SVOD) players: The practice will cost the sector upwards of $500 million worldwide in 2015, according to a recent report from research firm Parks Associates. But the reason subscription-video services are not moving to actively stamp out password sharing, at least for the time being, is that they don’t want to screw up the customer experience -- especially as they’re in growth mode, adding new subscribers every month.

First, think of it along the lines of the tech-biz maxim “it’s not a bug, it’s a feature.” 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. Right now, though, in the scramble for market share, putting up with password-sharing cheaters is a cost of doing business that Netflix and HBO don’t have an easy way to solve.