A survey conducted by Survata for Quartz, which was published Monday, found that fully 31% of people with access to a Netflix Inc. (NFLX) account do not pay for it. Mooching off the Netflix accounts of friends and family is a well-known phenomenon, and the company does not actually discourage it. The company allows two people to share a login for $8 a month, and four people to do so for $12 a month. (See also: Streaming Wars: Netflix Vs. Hulu Vs. Apple TV.)
CEO Reid Hastings said in January, “We love people sharing Netflix whether they’re two people on a couch or 10 people on a couch.” Hastings said. “That’s a positive thing, not a negative thing.” He argues that moochers go on to subscribe themselves when they have the disposable income, and the data seems to bear that out. While the vast majority – 69% – of people ages 13-17 use someone else's account, the rate drops off to 23% at 65-plus. (Males, interestingly, mooch at a significantly higher rate than females: 37% versus 27%.)
The rationale for the streaming services may be, why fight a losing battle? Since the halcyon days of Napster – and the cruder forms of bootlegging that preceded it – media-hungry young people have found ways to consume the content they want, legally or not. Password-sharing is the simplest way to accomplish that goal on Netflix, and if users are bound to do it anyway, why not encourage it? Richard Plepler, president of Time Warner Inc.'s (TWX) HBO, called password-sharing a "terrific marketing vehicle." Besides, if the practice caused users to constantly kick their friends and family out of their sessions, they'd likely migrate to a more lenient service.