Password Sharing Not the Biggest Problem for SVOD Services, Study Says

For movie and TV studios, the big bugaboo is people illegally copying or downloading their IP. For SVOD services, it’s another form of piracy — password sharing, which cost companies $500 million worldwide in 2015, according to a report by Parks Associates.

But a new study from IBM Cloud Video, titled “Everybody Wants to Rule the Streaming World,” suggests the real threats to SVOD services’ bottom lines might be of the self-inflicted variety — high prices, lack of good content and too many ads.

The study found that while 27% of respondents indicated that they have used someone else’s password to test a service, the borrowing usually occurs between family members. Forty-two percent of respondents indicated that they shared with their family, compared to a combined 4% of respondents who share with friends, roommates or anyone that asks.

At the Consumer Electronics Show in Las Vegas in January, Netflix CEO Reed Hastings said that password sharing “really hasn’t been a problem” for the streaming service.

“We love people sharing Netflix whether they’re two people on a couch or 10 people on a couch,” said Hastings. “That’s a positive thing, not a negative thing.”

However, Netflix may want to pay attention to IBM Cloud Video’s findings about customers canceling SVOD services, especially given its recent price increases.

The report found that 16% of its respondents opted out of streaming services through passive cancelation — they received a new credit card and failed to update their billing information. The phenomenon was most common with 30- to 44-year-olds, 28% of whom said they passively canceled their accounts.

The bigger problem is deliberate cancelation. Thirty-one percent of those surveyed said they had canceled an SVOD service at some point. It was more common for those whose primary service is Hulu or Amazon, 40% of whom said they cancelled in the past, versus only 30% for Netflix.

The top factors leading a user to cancel include too many ads (27%), a potential factor for Hulu, cost (25%), lack of good content (20%) and technical problems (17%), but the most-cited reasons were buffering (49%) and delayed start (24%).

The best news for the streaming biz in the study is that, in its survey of 1007 U.S. consumers, it found that two-thirds of adults reported using an SVOD service, and nearly half of the SVOD subscribers use them as much as or more than their pay television service.

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