Netflix is losing billions of dollars a year because of illegal password-sharing ‘marketplaces’ that offer access for just $1, experts have claimed.
The poplar streaming app is missing out on up to $6.25billion annually as customers use the services to dodge the $19.99 a month premium account fee.
But the firm last month launched its first major counteroffensive by letting watchers add up to two other users for just $2 in some countries.
Netflix is not the only website to be hit by the scams, with HBO Max and Disney+ subscriptions also being ripped off by dodgy so-called marketplaces.
It comes as the battle for eyes ramps up as the market is flooded with streaming services offering the biggest shows and movies on the planet.
Yet at the same time experts said the number of illegal password sharing sites has also skyrocketed.
One website was illegally offering Netflix in Ultra HD for ten days for just $1, slashing the usual price of $19.99 a month.
Meanwhile another listed HBO Max – which airs Succession and Mare of Easttown – for $1.09 a month instead of the normal $14.99.
And a Disney+ subscription was being touted for just 90 cents, when a legitimate monthly plan would be $7.99.
Ken Gerstein, who is vice president of sales at NAGRA and advises firms on antipiracy measures, said its now reached a ‘tipping point’.
He told The Sacramento Bee: ‘We’ve seen an increase over the past few years, especially under Covid, because more people were subscribing to streaming services versus traditional pay TV.
‘One of the behaviors we’ve seen is that with subscription stacking, it started to become expensive for consumers, and pirates have seen an opportunity in credential theft or credential hijacking.’
The pandemic saw a spike in password sharing as people spent more time at home with fewer things to do.
The main culprits were younger watchers, people aged 18 to 24, the Advertising Research Foundation found.
Experts said this could be to do with them being on lower wages and looking to save much-needed cash.
Streaming services such as Netflix and Disney+ were the most targeted – rather than sites like ESPN+ – due to the wide range of shows, they claimed.
As much as 36 per cent of Netflix users share their password with at least one member of their family and 13 per cent with a friend they do not live with.
Meanwhile 32 per cent and 13 per cent do the same for their Disney+ subscription respectively, according to researchers.
Despite the dodgy methods, customers appeared delighted with the deals, with some saying ‘five stars again,’ ‘excellent,’ ‘all good’.
Password sharing has become a huge problem for streaming giants, with losses estimated to be up to $25billion a year, according to one Citi analyst.
Netflix is reportedly shouldering 25 per cent of this amount, meaning it is losing out on around $6.25billion a year.
Netflix is reportedly shouldering 25 per cent of this amount, meaning it is losing out on around $6.25billion a year (file photo)
The streaming giant launched its first big fightback in the war against illegal password sharing last month by offering discounts to add users in some countries.
It has trialed rolling out the features – allowing two additional users for $2 or $3 per person – for customers in Chile, Costa Rica and Peru.
And last year it brought in a warning when logging in that people should not use the password of someone they do not live with.
It comes amid fears that confusion over when people can share access to accounts has led to the spike in dodgy websites.
Netflix director of product innovation Chengyi Long said: ‘As a result, accounts are being shared between households — impacting our ability to invest in great new TV and films for our members.’
She added the tests in southern America would be checked before being used in other countries.
The actions has been long in the making, with the firm previously appearing to endorse password sharing in 2017 by tweeting: ‘Love is sharing a password.’
But as the competition for customers and profit margins heats up Netflix has pushed back against the idea.
The company is expecting slower subscriber growth in the coming months compared to rocketing membership in previous years.
It said it is likely to pull in 2.5million new viewers in the first quarter of this year, down from four million in 2021.
Netflix has been approached for comment.
