Netflix Losing $6 Billion a Year on Password Sharing, Analyst Says

(Image credit: Netflix)

Citi equity analyst Jason Bazinet said that password sharing costs U.S. streaming companies $25 billion annually in lost revenue, and Netflix owns about 25% of that loss. 

“As streaming services move to center stage, thwarting this theft will be of growing importance for shareholders,” Bazinet wrote in a note to investors Monday morning. 

The Citi analyst’s estimate comes 10 days after Bank of America published a note suggesting a “substantial percentage” of streaming subscribers are sharing their authentication credentials with friends, family and hangers-on outside their homes. 

And research firm Magid said that about a third of all SVOD customers share their password with at least one other person.

For its part, Netflix began earlier this month testing a new crackdown, in which it is forcing users of its service outside the account holders IP address to use third-party authentication. 

Netflix is also testing a 30-day free trial of its service. 

Daniel Frankel

Daniel Frankel is the managing editor of Next TV, an internet publishing vertical focused on the business of video streaming. A Los Angeles-based writer and editor who has covered the media and technology industries for more than two decades, Daniel has worked on staff for publications including E! Online, Electronic Media, Mediaweek, Variety, paidContent and GigaOm. You can start living a healthier life with greater wealth and prosperity by following Daniel on Twitter today!