Subscribing to Netflix, Amazon, or Hulu costs less than $15 a month -- a bargain some might say. But there are still a lot of people who avoid that modest monthly subscription by using a friend or family member’s login.
These video streaming services spend billions of dollars each year obtaining existing and producing original content yet they have to contend with consumers sharing a subscription. A new report from CordCutting.com estimates that about 20 percent of people watching a pay video streaming service are using someone else’s account.
The report finds that Netflix has the most freeloaders. Nearly half -- 48 percent -- are using their parents’ account. Another 14 percent use another family member’s login.
Netflix has responded to this trend by creating a level of service -- at a higher rate -- that allows two users to be logged in at the same time.
Broken down demographically, the report shows that millennials tend to make up a large segment of the freeloaders. They make up 18 percent of the Netflix pirates and 20 percent of those piggybacking on someone else’s Hulu account.
No doubt they view it as a victimless crime, but the study shows that the practice can have a rather large impact on a video streaming service’s bottom line. In the case of Netflix, which spends more on content that Disney, the company is estimated to lose as much as $192 million a month from piracy.
Piracy losses for Amazon are estimated to be $45 million and Hulu loses about $40 million a month.
You could make the case that people freeloading on someone else’s Netflix account probably wouldn’t subscribe to the service anyway, but there are plenty of analysts who think otherwise. Netflix continues to add subscribers but much of its growth is coming from overseas.
How much better could it do?
The study suggests Netflix could be doing a lot better if everyone played by the rules. It surveyed a sample of people using someone else’s account and found that nearly 60 percent said they would pay for the service if they lost access. That would add an estimated $112 million a month to Netflix’s revenue.
That said, the company appears to be doing just fine. In its latest earnings report, Netflix said it added 8.8 million new subscribers, a better-than-expected performance. It earned 30 cents a share on revenue of $4.19 billion.