Netflix Isn’t Cool With Password Sharing Anymore. Why Piracy Is About to Be the Next Battle In the Streaming War

Netflix Isn’t Cool With Password Sharing Anymore. Why Piracy Is About to Be the Next Battle In the Streaming War

There was a time when Netflix's CEO said that password sharing was "something you have to get used to." Which made sense at the time, since pretty m

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There was a time when Netflix’s CEO said that password sharing was “something you have to get used to.” Which made sense at the time, since pretty much everyone did it in some form or another. Basically, Netflix’s position has been that it doesn’t condone password sharing, it just isn’t going to do anything about it.

Until now.

Or, as they call it, “piracy.”

We’ve certainly come a long way since the days where the MPAA and RIAA were fighting against Napster and other file-sharing services to stop people from ripping their CDs and DVDs and sharing them online. I don’t even know anyone who still buys DVDs, and my children don’t even know what CDs are. 

But as a service reaches a saturation point of subscribers, at some point two things happen: people stop signing up for new streams because their budget can only take so much, and they share their accounts with others. If you’re trying to build an audience, the last thing you want is for people to freeload off their parents, friends, roommate, or neighbor. 

And, if you’re an established player like Netflix, Hulu, or Amazon Prime, you recognize that at some point, some percentage of those freeloaders represent real lost revenue. Which, in the long run, is the entire point, if you’re spending billions and billions of dollars a year to license or create content and deliver it to people’s homes and phones.

Up to this point, no one seems to have cared, especially since Netflix already has an enormous subscription base and pretty much dominated the game, and Amazon gives away its service with a Prime Membership. But as heavy hitters like Apple and Disney are getting into the game, the stakes are suddenly much higher. 

Which is why, as The Hollywood Reporter points out, the Alliance for Creativity and Entertainment (ACE) is looking at ways to “reduce unauthorized access to content, specifically mentioning improper password sharing as a top concern.” First, you have to admire the moxy of a group that calls itself the Alliance for Creativity and Entertainment. They clearly suffer from no lack of confidence.

The ACE is made up of all of the major studios, including Warner Bros., Disney, Netflix, Sony, and Paramount along with Amazon and Comcast, and says it doesn’t plan to take action against individuals, but instead will work on technological solutions that prevent password sharing. That could involve location and device tracking technology which would likely raise additional privacy, and not just piracy, concerns.

Look, it’s totally reasonable for Netflix to say, “We’d really rather that college students pay for their own subscriptions, but we know they won’t, so we’ve put up with them freeloading. But now you’re a grown up and it’s time to pay up.” The trick is that I’m sure companies have no interest in making a bunch of people mad, because mad people don’t usually rush out to sign up for your service.

Still, these moves show just how important it is to streaming service companies to maximize every opportunity to build a paying audience. Especially when the new players (Apple and Disney in particular) plan to offer year-long free trials to entice viewers to stick around. 

The bottom line is this: The day is coming soon when you might have to actually decide whether it’s worth paying for Stranger Things and The Handmaid’s Tale or Star Wars and The Morning Show. When that day comes, you’ll have to decide whose stream–revenue stream, that is–you want to contribute to.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.

This article is from Inc.com

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