This summer, international and regional video streaming platforms everywhere are rolling out major password sharing crackdowns, to rein in the large number of long-tolerated illicit users in the profit-troubled industry.

These platforms now feel far more comfortable taking a tougher stance, knowing that premium streaming service consumer acceptance of advertising in response for a cheaper subscription service, is in fact hardier than once believed.  

Follow the password leader

This evidence arrived in the form of Netflix’s recent Q1 2024 earnings report which announced a subscriber base of 40 million for its substantially cheaper, ad-sponsored tier; almost double the size reported for end-2023. What’s more, 40% of all new signups in the quarter took the cheaper ad-tier plan, in markets in which this was available.

The introduction of this ad-tier, rolled out in tandem with a stronger password sharing crackdown, has not only boosted Netflix’s profits, but incentivised other video platforms to follow suit. In recent weeks smaller and regional platforms, from Tencent Video in China to Viaplay the Nordics have rolled out stricter rules and service denial enforcement for unwanted users.

According to Viatel’s President and CEO Paul Rellis “We estimate that approximately a third of premium subscribers have been sharing the account details for their Viaplay subscriptions. This is not fair. … We will implement more far-reaching initiatives this summer.” The study of concurrent streams during live events, as well as IP address user confirmations with one-time passwords, are among just some of the password crackdown tools at these platforms’ disposal.

Different platforms, different password rules

To be fair, platforms have always had some quite diverse rules and policies around platform sharing, and a recent wave of password sharing rule revisions hasn’t ironed out the inconsistencies.

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Whereas Apple TV’s Family Sharing service allows a registered subscription account owner to share a password with up to six family members wherever they are based, many platforms such as Disney+ insist that password sharers should live in the same household. All, however, are attempting to tighten up on device and password sharing registration, inviting illicit users to either take out their own subscription, pay a premium to be an ‘extra member’, or opt for the cheaper ad-tier.

The ad-tier end-goal

Netflix’s recent success with its ad-tier is the template for this future. Netflix was one of the first major player in the US market to introduce a cheaper ad-tier subscription service. Despite some quite considerable skepticism at the time, the ad-tier has proven a solid business case.

Others, from Amazon Prime Video to more recently Max, have followed, and smaller players such as Viaplay have also outlined similar ambitions. The fact that Netflix, a company which just a few quarters ago was considered a complete newbie to the advertising world, is now planning to launch its own ad platform by next year, is a strong indication of where the video industry is moving.