Streaming Video Credential Sharing: How Service Providers Can Identify and Stop Unwanted Password Sharing
By Ryan Greenwell
In today’s “TV Everywhere” (TVE) world, consumers can watch content wherever they want, whenever they want, and on whatever devices they want. This flexibility is convenient, but introduces new risks for streaming video providers, including the potential for subscribers to share their account credentials with non-subscribers. As the streaming service market becomes increasingly competitive, service providers will look to mitigate unnecessary costs and capture the revenue opportunities that exist in credential borrowers.
A 2017 Reuters/Ipsos poll shows that over 20% [i] of young adults who stream OTT video content are borrowing someone else’s credentials. This creates problems for service providers:
Service providers are leaving revenue on the table by failing to convert non-subscribers into paid accounts.
Added Infrastructure Costs:
Traffic from non-subscribers contributes to server load and increases operational expenses.
Potential Legal Liability:
Service providers might be violating content licensing agreements by allowing non-subscribers to view premium content – the reduced number of paid users may also put upward pressure on content costs.
Over recent years, many content providers have turned a blind eye on credential sharing. Providers such as Netflix, HBO and Amazon have indicated that they are accepting of the practice and may even promote it as a marketing strategy. HBO, for example, has offered HBO Go and HBO Now services for free to many colleges and universities. The likely strategy of this is to attract younger viewers before they become financially independent with an extended “free trial”, and to convert them to paid subscribers later. However, the dynamics are changing and limiting this sort of behavior will become increasingly important to both standalone OTT services as well as Pay TV providers with TVE solutions.
Standalone OTT Services
Standalone OTT services such as Netflix, Amazon, and Hulu have primarily differentiated themselves through original content creation, offering it exclusively to subscribers. This, in conjunction with a rise in cord cutting and increased global penetration of smart devices, has given standalone OTT services a stable foundation for growth. Netflix has enjoyed 2.5% [ii] quarterly subscriber growth in the US over the past two years. In these conditions, a limited focus on credential sharing seems logical.
However, the market is becoming increasingly saturated as Premium Network OTT services from HBO, Showtime, and Starz continue to gain traction in the US. As competition increases, those stubborn credential borrowers will start to represent lost revenue, added costs, and a potential legal liability. In response, OTT services should look to reduce costs and realize new revenue by deterring credential sharing and converting non-subscribers into paid accounts.
Pay TV Providers with TV Everywhere Solutions
The Pay TV market faces increasing levels of stress going into 2018. The number of streaming video service providers continues to grow, making it much easier for customers to cut the cord. Furthermore, subscriber counts and revenues for the US Pay TV market are expected to continue to decline between now and 2020. Many providers have responded to streaming services by integrating more OTT offerings within TVE bundles. However, as these OTT TVE products are increasingly available, they may actually encourage Pay TV subscribers to cancel their subscriptions and borrow TVE credentials as a substitute. Pay TV providers accordingly need a robust strategy to identify and mitigate credential sharing activity.
What Can Be Done?
To deter credential sharing, both standalone OTT services and Pay TV providers with TVE solutions must maintain robust credential sharing identification and mitigation programs. An effective program has many components, and require several key competencies:
Data Organization & Integration:
Consolidating viewing log data at an account level to get a comprehensive view of account usage patterns.
Credential Sharing Pattern Identification:
Identifying behaviors and associated metrics that indicate credential sharing activity, (e.g. device patterns, geolocation patterns).
Customer Segmentation & Risk Quantification:
Developing an aggregate view of accounts at risk of credential sharing and quantifying total exposure.
Policy Implementation & Mitigation Tactics:
Developing and enforcing a range of policies to reduce credential sharing behaviors, while maintaining a positive user experience for subscribers.
Credential sharing costs Pay TV and OTT streaming service providers alike, through increased server load, content licensing legal liabilities, and lost revenue opportunities. As service providers face growing market pressures in the coming year and tolerance for these costs subsides, firms should begin allocating more resources to the above activities to monitor and deter non-subscribers from borrowing account credentials. <>
> Check out Cartesian’s report “How Consumers Access Streaming Video: The Risks of Credential Sharing“
[i] “Here’s How Many People Admit to Not Paying for Netflix and HBO Go”, Time.com/Money, July 2017
[ii] Cartesian analysis of Netflix 10-Q and 10-K filings