The UK’s Intellectual Property Office (IPO) has introduced an unspecified number of users of streaming services in the UK into illegality. Specifically, those who are using for free a password of someone who pays for access, who are explicitly mentioned in the new guidance published by the institution as copyright infringers. In the case of Netflix alone that figure could be well over 17 million households, more than a quarter of all those who use the platform in that country, according to estimates by research firm Digital i.
All of them could face criminal and/or civil action, according to IPO, which leaves it up to providers to take those users to court on grounds such as fraud, breach of contract or secondary copyright infringement. The guidance also refers to the consumption of content with devices that have a lawful purpose but through certain applications or programmes give access to services that the user would normally have to pay for.
The legal actions enabled by this scenario are not usually the ones chosen by companies, both because of the potential image problems and the cost of launching such proceedings. Even less so if users have been previously encouraged to share their accounts as a marketing lever, which is what is happening with Netflix. This platform has been evaluating for years how to influence this illicit access by users and is now testing a mechanism in several countries in the Americas to bring these people into the payment system. This plan consists of stimulating the creation of extra accounts with a discount of up to 70% compared to the price of a normal subscription, once consumption from outside the normal home has been detected.
With this scheme Netflix aims to convert new subscribers in the least aggressive way possible. The size of the lost revenue is considerable, at least according to an estimate by analysts at investment bank Cowen & Co. Their study estimates that the company could bill up to $1.6 billion a year more if just half of those who log in with a third-party account paid an additional fee to do so. That would be an increase of around four per cent on revenues of $38.8 billion projected for 2023.
The Intellectual Property Office explicitly mentions that those who consume content for which they do not pay expose themselves to civil and/or criminal prosecution.
The prevalence of this habit is unclear, but in the US, for example, The Advertising Research Foundation estimates that up to 36% of Americans share their account with family members living elsewhere and around 13% do so with friends. And in this context, almost 10% of broadband households in the US have a member who watches Netflix without paying for it, which would contravene the company’s internal rules if it happens outside the context of normal cohabitation.