SVOD Providers Have Options for Dealing With Account Sharing: Panel
Panelists on a Wednesday Aluma Insights webinar tackled the challenges subscription VOD providers are facing with implementing tighter account sharing strategies after years of looking the other way to grow subscriber bases.
In the early days, the streaming industry “just wanted adoption,” said Joel Espelien, Corum Group executive director, saying companies “normalized, tolerated and encouraged credential sharing.” Companies rationalized the practice of credential-sharing by adding “tons and tons of subs and trying to get critical mass” through pass-along marketing in the hopes of netting free trials “by any means necessary.”
The industry “kind of liked it, and now we've kind of created Frankenstein, and now we’re trying to deal with Frankenstein and make sure Frankenstein doesn’t run rampant through the village,” Espelien said. When growth slowed, the tone changed. “Now password-sharing isn’t such a great idea,” he said, saying it’s a “natural outgrowth” showing the maturity level of the industry.
Account sharing is “rampant” among younger consumers, Espelien said, with about a third of Generation Z customers sharing passwords with others outside the home occasionally, 18% frequently, and 27% and 13% of millennials engaging in the practice. Fifteen percent of Gen X and Baby Boomers share occasionally and 7%-8% frequently, he said, citing Aluma figures.
Netflix said on its most recent earnings call that some 30 million accounts are being shared in the U.S. (see 2204200002), and services with highly popular content like Disney+, with the popular Obi-Wan Kenobi series, are likely spurring a lot of credential-sharing, Espelien said. Aluma estimates a third of Disney+ users share passwords, 30% for Netflix, 21% for Hulu, 18% for HBO Max and Paramount, 16% of Prime Video customers and 15% of Apple TV+ users.
A dilemma for service providers is how to crack down on abusers without alienating subscribers, Espelien said. “If we bring down the sledgehammer, we’re potentially going to alienate the customers, causing more churn" and possibly creating "a PR backlash on Twitter,” he said. There’s also the question of what's legitimate sharing and what isn't, Espelien said, citing the scenario of a subscriber traveling to a hotel and accessing her account from that location. “What if I’m staying in my second home? It’s not always completely black and white what’s appropriate and what’s not.”
A lot is at stake, Espelien said, citing “major" lost revenue estimated at $25 billion, which could grow higher “if this gets totally out of control.” He noted the difficulty of putting “the genie back in the bottle,” comparing the situation to the music industry in the rampant file-sharing days. “There was a lost decade there where the music industry was not monetizing well,” he said. “Once you let these consumer behavior trends spiral out of control, it's really hard to rein them back in.”
How to crack down on account sharing without coming down too hard on subscribers is critical, Espelien said, giving the example of a subscriber having to log in every time she wants to watch a service -- particularly on connected TVs where “typing in your password is just way too clunky still.” Authenticating an account by smartphone is also “really, really irritating,” he said. “There’s problems if the industry goes ultra-extreme here and just starts locking everyone out of everything.” Consumers are OK with their bank being extremely careful with two-factor authentication, he said, but they won’t want to have to give a password and PIN to their kids every time they want to watch TV.
Espelien suggested a four-phase approach: (1) analyze and understand the sharing, (2) implement incremental targeted action to a limited number of users to avoid a social media backlash; (3) track results of the test actions and (4) iterate. He suggested not taking an approach of wiping out all credential-sharing but instead taking a more “nuanced” approach that’s rooted in data “and what actually is going to work.”
Possibilities for how service providers can curb password-sharing include implementing a different log-in process for sharers; charging the main account for additional family members outside of the house; notifying sharers that the provider knows what’s going on, with a warning they could be kicked off; running more ads during the sharer’s viewing to “monetize them until they pay”; and tightening the authentication process.
Adobe is working on solutions for service providers, said Brian Brinkman, principle product manager-prime-time authentication. Through data collection and machine learning, Adobe has identified password-sharing and extracted viewing patterns SVOD providers can use to make decisions on how to handle account-sharing. That includes distinguishing between a subscriber accessing an account from somewhere else in the country vs. “excessive sharing that might be going on.”
The data analytics company is able to determine how many individuals and devices are involved in a shared account and breaks the data down into clusters of activity, Brinkman said. Machine-learning models have been trained with “years and years” of transaction, authentication and authorization data, he said, which can tell providers the number of devices and individuals attached to an account. “I can look at groups that might be small families but have 20 devices,” he said, "or groups spanning a couple of thousands of miles and have multiple clusters of activities.”
If a group of sports enthusiasts “all show up at the same time,” an SVOD provider could apply concurrent stream limits, Brinkman said. The provider can take actions using the data and track the outcomes of the actions, he said.
Actions could include making an upsell offer to users who are sharing. If it’s a small group of sharers on an account, the provider could make an offer to the account holder to pay for the additional users without a registration required, he said. Or, they could choose to run an additional ad load for the borrower, he said. “Maybe it’s so excessive that you do want to cut down on the amount of concurrent usage, or implement multifactor authentication for those devices that appear to be outside of the home ownership," he said.
Providers also can reward good behavior or behavior that’s “playing within the boundaries,” Brinkman said, by making the viewing experience “as much like regular TV as possible" and not give subscribers a reason to question what to do when renewals come up, which could lead to churn.