Account sharing is a $7 billion problem for online video platforms, but only if they want it to be

1 May 2020 by Steve Blum

Elmer fudd

Californians who are fortunate enough to have fast, reliable broadband service can occupy their locked down, sheltered-in-place hours by watching a seemingly infinite selection of online video content. Some of it is free, but the good stuff usually requires a subscription to one of the many over-the-top streaming platforms. For most of those, all you need is a user name and password to log in and start watching.

Which creates a problem. It’s easy to loan your account info to family and friends, and hard to say no. According to a study by Parks Associates, such “credential sharing” cost U.S. video platform operators $6.6 billion.

The basic question about account sharing is whether an OTT platform thinks it’s selling a subscription to a stream, or a license to use the stream to a particular person or household. If it’s about the stream, then there’s a technical solution: only allow one stream to be used by a particular account at any one time (or however many streams that the platform chooses to sell).

If it’s a personal or household license, then it gets trickier. This is not a new problem. Software developers have been trying to restrict copying and reuse since the days of Fortran. And they’ve also profited from it. Illegally copied or not, the more users of a particular application, the more market share, and eventually some, if not most, of those illicit users will convert to paying customers. “SneakerNet” disk sharing 30 years ago is one of the reasons Excel and other Microsoft Office products have a dominant share today.

It can work the same way for streaming platforms, but they have another advantage, in that they have a real time, two way connection with the subscriber, or whoever is accessing a stream at the moment. That gives them the ability to implement conditional access solutions, similar to what DirecTv or DISH use but probably more effective and less costly.

But still more trouble than what they’re doing now. That raises the cost – in dollars and bandwidth – and decreases convenience, which impacts operations, the selling proposition and subscriber retention. But it’s part of the game. We went through this same transition in the satellite industry in the 1980s and came out just fine, once we accepted that we had to do it.