Netflix could make $400 million more a year if it cracked down on password sharing

Streaming services like Netflix and HBO Now don’t care if users share passwords. But they may start to.

Twelve percent of adults who use streaming services such as Netflix have done so for at least one service by using credentials from someone outside of their household at some point, according to a new survey by Reuters. That share is higher among viewers ages 18 to 24. Twenty-one percent of those young-adult streamers have borrowed someone else’s password, found the June survey of more than 4,400 US adults, including 3,500 who streamed video through cable-TV providers or services like Amazon Prime, Hulu, or Netflix.

If Netflix thwarted password sharing, and converted those users into paying subscribers, it could add a good chunk of change to its top line.

In 2017, 54% of US adults said they had Netflix in their households, according to a January survey by Leichtman Research Group. With 126 households in the US as of 2016, per Statista, that would equal nearly 68 million Netflix streaming households. Now, we’re talking households rather than individuals, so we’re going to cut that 12% of password borrowers in half, to be on the safe side.

If 6% of that audience, or 4 million US households, stopped borrowing passwords and signed up for their own Netflix memberships, Netflix could stand to make as much as $391 million more a year. That’s if each of those new members signed up for Netflix’s cheapest plan, which is $7.99 a month in the US.