Sharing logins may seem like a harmless act of generosity for subscribers who want others to enjoy premium video, but it’s hurting broadcasters. By 2021, free-flowing credentials are predicted to account for £7.76 billion of Pay TV revenue losses and over-the-top services (OTT) aren’t safe either, with an expected profit dip of more than £900 million.
To date, the industry has mostly seen credential sharing as an unavoidable hazard; minimal regulation has made it easy for subscribers to pass on details without any negative effects. Netflix CEO Reed Hastings even theorised that “sharing passwords is something you have to live with” only three years ago.
Yet as the number of free viewers per paid account grows, the issue is becoming too big and too expensive to ignore. The survival of broadcasters now depends on better content protection. And to start, they’ll need a greater understanding of the credentials problem and its impact.
The content sharing phenomenon
Streaming and subscription video on-demand (SVoD) services are experiencing an explosion in popularity; at the end of 2018 total SVoD users topped 200 million and Netflix alone had a global customer base of 148 million. But while this is good news for the industry, demand for quality content is also high for viewers who want admission without paying the entry fee. According to a 2017 study by Reuters, 12% of adults admitted to using at least one video service with someone else’s account details and sharing was especially rife among millennials, with 21% borrowing passwords. More recently, US research has revealed even further growth in credential swapping, with 35% of 18-34 year-olds now exchanging streaming-service logins.
Dented profit and legal jeopardy
The key problem for content providers is, of course, revenue. Independently, subscription payments make a relatively small contribution to the bottom line – but high volumes of illegitimate users can cause significant damage. Financial reports by Hulu stakeholders have estimated that the US streaming giant misses out on $1.5 billion annually, and it has been suggested Netflix could make $391 million more each year. Moreover, because unauthorised users have little incentive to create accounts, it’s likely continual password distribution will lead to a sizeable fall in future subscriptions; reducing profitably and the funding needed to produce original content that attracts users.
And that’s not all: illegitimate viewing can impact digital rights management. Not only must broadcasters pay large fees to serve content, but they are also subject to strict rules about where it can be distributed. So, as well as losing the ability to recover fees via subscriptions, broadcasters may end up in hot water if unofficial viewers use circumvention tools to watch content that is not available in their region, or covered by a different local service.
What can broadcasters do?
Clearly, preventing users from sharing their credentials isn’t feasible, which means content producers are left with only one option: finding a way to stop access for non-paying guests. Yet clamping down on subscription sharing isn’t necessarily as straightforward as it seems.
The most obvious solution is using smart tracking technology, but digitally savvy consumers are aware of underhand methods that can help them cover their tracks. For example, virtual private networks (VPNs) are increasingly being deployed to disguise true location by altering a viewer’s IP address; global usage has grown by over 160% year-on-year since 2016. The trouble is; VPN implementation isn’t always intended to disguise illicit content viewing; it can also be inspired by online privacy concerns. And that means broadcasters can’t simply solve the credentials sharing problem by blocking all VPN users.
Instead, broadcasters must take a more in-depth approach that takes a closer look at viewer activity. For instance, analysis of non-personally identifiable IP geolocation data can help broadcasters monitor patterns of user behaviour and flag any suspicious use. By tracking when, where and how accounts are logged in to, they can learn to distinguish the habits of genuine users from password sharers, and terminate access for unauthorised viewers in real time.
Plus, by utilising tools with the capacity to track velocity and connection type, combined with granular latitude and longitude data, broadcasters are empowered to identify legitimate content consumption, measuring the geographical distance between log ins to detect when users are acting suspiciously. For example, organisations can identify when two viewers are not in the same house and are unlikely to be watching together.
The rapid spread of free viewing — and its associated costs — means that credential sharing is a massive threat to the industry. Content producers of every variety can’t afford to overlook the damage done by free content access to revenues and future monetisation ability. If they want to secure a sustainable future for subscribers and their own services, the time has come for action to ensure the right users can keep watching the content they love.