advertisement

46 percent illegaly share streaming accounts, study shows

A survey conducted in December 2014 by the Consumer Reports National Research Center revealed that 46 percent of American adults with streaming media accounts admitted to sharing login credentials with people living outside their homes, which could include kids living at college and friends.

And the numbers are likely to grow as streaming video becomes more popular. The survey found that about half of U.S. households reported having access to at least one of the big services: Amazon Prime Instant Video, HBO Go, Hulu Plus, Netflix or WatchESPN.

The situation would seem certain to provoke a corporate backlash. Are cease-and-desist orders and lawsuits poised to be unleashed on consumers? In short, the answer is no -- at least not yet. Streaming media companies Consumer Reports contacted said they had no plans to get tough with cheaters. Cliff Edwards, a Netflix spokesman, said that a crackdown is "honestly not even a conversation in the company right now."

However, streaming services could reconsider their stance on account sharing. This year HBO plans to start allowing users to purchase access to its streaming content without a cable TV subscription, which is currently required. But if a new streaming-only service eventually prompts fans to drop HBO channels from their cable packages, the company could clamp down on freeloaders to avoid losing subscription revenue.

Vague terms of service

Company priorities aside, it is unclear whether people who widely share login credentials are breaking criminal laws. Some violations of online terms of service could potentially violate federal criminal laws. But the language used in those agreements can be ambiguous.

Consider Amazon Prime Instant Video. On its site, Amazon says, "You can stream up to two titles at the same time using the same Amazon.com account." Yet, elsewhere the company states that although Amazon Prime members can share their shipping discounts within certain limits, "other Amazon Prime membership benefits such as Prime Instant Video, Prime Music, and the Kindle Owners' Lending Library can't be shared." Read literally, the statements conjure the strange scenario of an Amazon Prime user viewing two different Prime streams on two devices at the same time. It's more likely, though, that a spouse or child in the household would view the second stream.

As for the leader in the field, Consumer Reports notes, Netflix doesn't specify in its terms of service who can share access, though it says that account owners shouldn't share their passwords with anyone. Four people can stream content simultaneously under the $12-per-month premium plan. However, company CEO Reed Hastings clarified his perspective during a 2013 earnings call. "We usually like to think that a husband and wife can share an account and that that's perfectly appropriate and acceptable," he said. "If you mean, 'Hey, I got my password from my boyfriend's uncle,' then that's not what we would consider appropriate."

Why it will continue

The streaming services aren't looking the other way by accident, says Dan Rayburn, principal analyst at Frost & Sullivan and a founding member of the Streaming Video Alliance. "If they really felt the impact to their bottom line in some way, they'd do something about it," he says. The situation could become a problem for cable TV providers long before a streaming service such as Netflix has reason to worry. If you can get great TV and movies free, you might be tempted to drop your entire cable TV package. But that's speculation. So far, despite the attention paid to cable cordcutters, the numbers are small. "For 2014, it looks like, combined, all pay TV providers (lost) about 400,000 subscribers," Rayburn says. "That's not even half of 1 percent of the total pay TV market."

For now, consumers who are happily squatting on other people's streaming accounts are living through halcyon days. And they will last as long as building the market for streaming content is more important to corporate players than plugging leaky revenue pipes.