Why a “crackdown” on password sharers is an opportunity for building lasting subscriber relationships

In recent days, it was reported that streaming giant Netflix is trialing a crackdown on password sharing.

Whether the trial is rolled out permanently remains to be seen, but a Netflix spokesperson did tell the BBC that: “This test is designed to help ensure that people using Netflix accounts are authorised to do so.”

Of course, password sharing is something of an open secret with consumers, widely practiced, and up to this point, something that has been grudgingly tolerated by the big players. After all, it hasn’t seriously impaired the incredible growth stories that have characterized the market over the last few years.

Research conducted by Manifest in 2020 suggested that close to four in 10 (37%) of those in the US with a Netflix password share it with someone they don’t live with.

However, as the streaming wars intensify and consumers have an even greater breadth of choice, attitudes could be shifting in an effort to maximize revenues and maintain growth. In some ways, Netflix is a victim of its own incredible success. The best estimates state that around 17m households – 61% of the total in the UK – watch content on Netflix. That means that the pool of potential customers is dwindling, and in turn, the service needs to convince those sharing passwords to come on board fully.

But while the industry decides whether to follow Netflix’s lead, it should consider that this thorny issue can actually present an opportunity for services to build a positive relationship with potential future customers.

The carrot and stick… and OTT services

Instead of cracking down with an iron fist, rooting out password sharers with relentless fervor, a better approach would be to offer those rule breakers a way of staying with the platform, before they’re cut off for good. After all, even if this works on just a quarter of previous password sharers, this could lead to millions in gained revenue.

There are several ways services could go about this.

Maybe this starts with a “friends and family” offer, which has seen great uptake in the music streaming industry. Or perhaps a service could offer access to part of its library – not all – in return for a reduced monthly sum. It means explaining to the person that the service understands that they’ve been using the platform in a certain way, but now they have the opportunity to come on board properly, and on friendly terms.

For this to work, you need sophisticated data analysis tools that can tell you how a user has been engaging with a platform. You need to understand if they’re a heavy user of the service, or if they’re only logging on occasionally. If the service is a bit part of their leisure time, then by extension they should be more open to offers to stay.

It also needs a degree of editorial freedom and autonomy, and curating different messages based on the data at your disposal. And the tone should be conciliatory and friendly, rather than domineering and threatening. This will need sophisticated tools in order to decide on which user receives which message, and consequently, how they react to it. That will then inform a wider communications strategy.

Leave the door open

And if efforts to persuade the user to stay or sign up fall on deaf ears, it’s imperative that you make that experience as easy as possible, leaving open the possibility for the potential customer to return when their circumstances or motivations change. Ideally, you want that person to remember a respectful, fuss-free end to their experience, so that they’re more open to returning.