Netflix is losing billions a year to password sharing. Here’s how it plans to fight back

April 18, 2022, 9:19 PM UTC

With an increase in monthly subscription costs, customers are looking for ways to save money on their streaming services. Streaming giant Netflix is now facing the repercussions.

The streamer is missing out on up to $6.25 billion in annual revenue as customers flock to illegal password-sharing marketplaces, according to a recent report in the Daily Mail.

The marketplaces, such as TogetherPrice, offer access to subscriptions for as little as $1, allowing customers to share subscription costs.

Now Netflix is planning to fight back.

Netflix fights password sharing

Last month, the streaming service rolled out a new option allowing users to add someone to their plan for as little as $2 a month. However, this deal is offered only in some countries like Chile, Costa Rica, and Peru.

The streamer started warning users last year that people should not share their passwords with people they don’t live with. 

Earlier this year, the company also announced that it was planning on charging users who shared their passwords with people outside of their households.

The company has gotten some backlash for this warning, as back in 2017, it tweeted, “Love is sharing a password.” 

The root of the problem

When the pandemic started, people started spending more time at home, turning to binge-watching shows on streaming platforms. Demand surged for streaming platforms, as consumers sought out new shows and movies to watch.

NAGRA, an organization that develops digital TV standards, believes that the streaming market has become saturated, making it difficult for companies like Netflix to attract new subscribers.

“One of the behaviors we’ve seen is that with subscription stacking, it started to become expensive for consumers, and pirates have seen an opportunity in credential theft or credential hijacking,” vice president of sales Ken Gerstein told the Sacramento Bee.

However, according to the Advertising Research Foundation, 18- to 24-year-olds seem to be the problem. Experts suggest this could be because they have lower wages and are trying to save as much money as possible. 

Password sharing has become a problem for all streaming services and could cost the industry up to $25 billion a year, according to a Citibank report. 

Plans getting more expensive

Netflix recently hiked its subscription costs. Monthly costs for the basic plan went up by $1, while the standard and basic plans increased by $1.50 and $2, respectively.

Now Netflix’s cheapest plan goes for $9.99 a month. The standard plan costs $15.49 per month, and the premium plan costs $19.99.

That puts it at the higher end of streaming providers. Disney+ starts at $7.99, Prime Video starts at $8.99, Hulu starts at $6.99, and HBO Max starts at $9.99.

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