Casual credentials sharing over OTT services where people give passwords to friends and family so they can tap their subscriptions is almost certainly more common than “official” figures suggest. It is almost encouraged by some services, in both SVoD and live sports, by typically allowing two or three simultaneous active streams.
Until recently this has been regarded like shrinkage in retail as something that has to be tolerated and nothing much can be done about, even though it represents lost revenue. Most surveys put the incidence of regular casual password sharing in the range 25% to 40%, but it is a good bet well over half of subscribers indulge in the practice occasionally. There is also evidence that password sharing is correlated with age, so that Millennials engage in it the most while over 55s do it least, adding weight to the idea it is a growing problem.
It is hard to translate this into lost revenues with any accuracy because people who piggy back on their friends’ subscriptions would not all become customers if denied this source, any more than would those consuming pirated content. Even so, after applying a suitable corrective factor, probably approaching $10 billion revenue is lost to pay TV globally through such unauthorized credential sharing, with OTT accounting for a growing proportion of that.
Although it is the greatest issue, revenue loss is not the only one relating to password sharing. The extra traffic generated adds to infrastructure costs, while it can also result in technical violation of licensing agreements by allowing non-subscribers to view premium content. This could incur legal liability while certainly exerting pressure on content costs through having fewer paying users.
The question then is what operators can do to reduce such losses and the answer is to turn that around and ask how this phenomenon can be turned into a revenue opportunity. There is growing interest in this and it is no surprise that Synamedia, the company spun out of Cisco and headed by Abe Peled, has singled out credentials sharing for its product launch since opening for business in October 2018.
This does build on elements inherited from Cisco, some of which were first touted in 2016, founded on various machine learning and behavioral analytics tools. Synamedia is focusing the underlying platform on the two related but distinct challenges of addressing large scale piracy involving distribution of perhaps stolen credentials and the more casual password sharing among friends whose impact is cumulative. In either case the same body of techniques are used to identify where credentials are being shared in the first place, for example when access to a service is regularly gained from two or more distinct locations, rather than from multiple devices that appear to be owned by the same account holder.
There is an attempt to distinguish between sharing among close family members, often viewing from different devices in a single dwelling, and distribution of credentials among friends who say support different football teams and so do not often want to watch at the same time anyway. Although the latter activity may not even consume a subscriber’s maximum number of allotted streams it is a greater source of revenue loss because the users concerned could well be enticed to take out separate accounts if they were forced to.
Synamedia’s main slant is to target those subscribers who might be willing to pay more. This is not entirely new, given that the major SVoD providers for example have been aware that their credentials have been shared regularly for some years and have taken modest steps to monetize the phenomenon.
Netflix does by offering three pricing tiers allowing one, two, or four simultaneous streams, although that has tended to focus on large families watching different content at the same time within the house. Then HBO took a longer view by deciding to stop trying to charge some Millennials at all and give HBO Now and HBO Go away free to college and universities, in the hope enough students would be sufficiently hooked to become paying subscribers when they started earning.
Synamedia argues these operators can go further by first identifying sharing subscribers and then offering more imaginative packages with some upselling. The aim might be to combine some generous offers with a gentle reminder to the subscribers that their sharing has been detected. This might be more productive than the current common approach of enforcing a password change with some message that irregular account activity has been detected. This can readily be circumvented and merely imposes some friction on the sharing activity. Various approaches could be tried, such as super accounts allowing say up to five subscribers in the way that some software and online services are licensed. That is up to the operator with Synamedia just providing the tools to allow such offers to be made, as well as to police the services afterwards to prevent further violations occurring.