Sharing is Sacring

It’s not exactly like failing to pay your taxes, but to a streaming service, people who share their screen usernames and passwords are the Al Capone of their business model (it was the good old IRS that finally got him). And just like “Scarface” had to face the inevitability of death and taxes, the fees that we pay for Cable, Satellite and/or streaming services will most assuredly continue to rise. Not that those fees aren’t already at an all-time high. In 2022, C+R Research noted that the average household spent $219 on a video cocktail of services that range from their monthly cable or satellite service to a myriad of streaming video services. Is it any wonder that families look for ways to save money?

One of the major ways to save money is to share streaming log-in credentials. You subscribe to Hulu, my cousin Vinny subscribes to Paramount Plus, my Uncle Sam subscribes to Peacock, my Auntie Mame subscribes to HBO Max, I subscribe to Netflix, and we all share our usernames and passwords. In that way, we only have to subscribe to one service and in essence, we get all of the others for free, so long as we abide by screen-user limits. It kind of takes the sting out of all of those monthly streaming bills and acts as an antibiotic for America’s newest malady, “Subscriber Fatigue”.

For a long time, streaming services kind of looked the other way when families and friends shared their screen credentials. Most services do have a maximum number of screens that a subscriber can use at one time, but as long as we all stayed within those limits, anyone could share as long as they had a decent internet connection. However, as high-speed internet became easier to obtain and more streaming services signed-on, screen-sharing became almost a necessity if you wanted to watch all their offerings without getting a home equity loan.

In Netflix’s case, sources say over 100 million people share their password with their families and friends. In a strange way, all of that was OK with them because it gave people the chance to sample their product. But the streaming services had a little issue that was bound to put an end to the party – scary high programming costs. As they say, “Content is King”. Or in today’s non-binary lexicon, “Content is Monarch”. While big corporations were busy building all of these new streaming services, the Royal Highness needed to pay for all that content.

On April 20th, 2021, the Gods of Wall Street took a look at Netflix’s profit and loss statement and said, “We see plenty of loss, but we don’t see profit.” It was on that lovely April day that Netflix’s stock lost over 35% of its value. While its stock has gained back some value, there is no doubt that investors are getting tired of seeing red ink. You see, it appears that it costs Netflix more than a little money to produce all of that content - try almost $14 billion dollars in 2021. Stranger things may have happened before in the entertainment world, but I don’t think paying that much for “Stranger Things” has happened very often.

So, here comes the scary part for us. It’s time to pay-up for all that content. All the streamers have raised their costs recently. But Netflix is taking it one step further. Look at them as sort of the canary in the coalmine for screen-share charging. Which means that your cousin Vinny is going to have to either get his own Netflix subscription or you’re going to have to pay more for him to continue to share your credentials. This is not some kind of conspiracy theory. It’s really happening.

On February 8th, 2023 in a blog post titled "An Update on Sharing”, Netflix gave an official statement on password-sharing. The announcement says that over the past year, Netflix has been exploring different approaches to address this issue and is now ready to roll them out more broadly in the coming months. Netflix specifically mentions Canada, New Zealand, Portugal and Spain in its memo. Notice that the USA is not among those lucky countries – yet. So, while we’ve been busy trying to figure out how to seal our Southern border, Netflix has been planning a screen-sharing border incursion from our neighbors to the North.

What does this mean? According to its “update”, subscribers are advised the following:

· Set primary location: We’ll help members set this up, ensuring that anyone who lives in their household can use their Netflix account.

· Manage account access and devices: Members can now easily manage who has access to their account from our new Manage Access and Devices page.

· Transfer profile: People using an account can now easily transfer a profile to a new account, which they pay for — keeping their personalized recommendations, viewing history, My List, saved games and more.

· Watch while you travel: Members can still easily watch Netflix on their personal devices or log into a new TV, like at a hotel or holiday rental.

· Buy an extra member: Members on our Standard or Premium plan in many countries (including Canada, New Zealand, Portugal and Spain) can add an extra member sub account for up to two people they don’t live with — each with a profile, personalized recommendations, login and password — for an extra CAD $7.99 a month per person in Canada, NZD $7.99 in New Zealand, Euro 3.99 in Portugal, and Euro 5.99 in Spain.

By way of comparison in Canada, a standard commercial-free Netflix subscription costs $16.49 (CAD) for HD and $20.99 if you want to add the Premium 4K plan. So, if Cousin Vinny wants to continue to share your account, he (or any other household up to two) will need to fork over another $7.99 a month per up to two households. If a Canadian shares with one household, it’s probably still a good deal (assuming Vinny pays you the $7.99 each month). After that, it’s not worth it unless you are on the Premium 4K plan.

Here is sharing’s scariest part – If you think that this is just confined to Netflix, you’ve got Starz in your eyes. Every streaming service is watching this space. It’s just a matter of time before all the big providers follow Netflix’s example. That’s because costs are out-of-control. From watching a live football game to watching the Squid Game, the “Crown Royal” of content needs lots of gold to line its programming purse. It’s especially dire for companies like Netflix whose only business is streaming. Although they’d rather not, companies like Apple (Apple+ TV) and Google (YouTube TV) can absorb these costs. Just look at YouTube TV’s new deal with the NFL’s Sunday Ticket. They just paid somewhere between 2 and 2.5 billion dollars for the rights to air every NFL Sunday game. That’s around a billion dollars more than the previous provider, DirecTV paid for the same rights. That there is some real money folks.

The dust will eventually settle. There will be mergers and acquisitions in the streaming world because there are just too many players. I’d place my money on companies like Apple, Google, Microsoft and even Meta to be there at the end of all of this turmoil. The other bet that I would place is that we are going to continue to have to pay more each month, regardless of which Monarch rules the kingdom.