Credential (password) swapping has become a popular form of piracy in the connected world, one that has received little attention from service providers and content owners when compared to other forms of piracy like signal piracy, physical media piracy, and file sharing. Credential sharing has a measurable impact on video services, particularly in the OTT video service area, which impacts young subscribers most substantially. The impact on OTT video revenues—an estimated $500 million in lost direct revenue worldwide in 2015—is especially troublesome as service providers invest larger sums of money into original content offerings.

Parks Associates research shows 6% of U.S. broadband subscribers indicate that they access a subscription OTT video service paid for by someone outside their home. Younger consumers are more likely to access OTT video services through an account paid by someone living outside the home. This may involve pooling resources, unknown sharing, or known sharing, but a common method involves adult children using their parents’ account information after moving out of the house.

A 2014 Parks Associates study on video preferences of college students revealed attitudes toward paying for video services among younger age consumers. Many of the respondents showed no guilt or embarrassment when admitting to accessing others’ paid services, believing it is a common behavior. Motivation to pay for legitimate services appears low, with one particular respondent admitting a preference to forego service completely if sharing a friend or family member’s service was no longer an option.

While this type of piracy predominantly impacts OTT service revenues, the process will likely affect pay-TV operators in a similar fashion through TV Everywhere service offerings. The motivation for credential sharing is primarily economic, and a move to consolidate video service subscriptions among family and friends stands to impact digital video services of all types in the near future.

For more information on the effect of piracy on OTT, pay-TV, and digital media markets, see Parks Associates’ industry report The Cost of Piracy. 

Further Reading:

• OTT Subscriber Annual Churn Rates for Netflix, Hulu Plus, and Amazon Prime Users show consumers are testing new video services
• Consumer Trends Exploited by Piracy
• The OTT Playbook: Success Factors for Video Services