The website promised some tantalising deals. One seller offered 10 days access to Netflix in Ultra HD for just US$1 – substantially less than the regular US$19.99 a month for a Netflix premium account. Another seller pitched access to HBO Max, home of critically acclaimed shows such as Mare of Easttown and Succession , for just US$1.09 a month, compared to its US$14.99 a month price tag. Someone else was offering a Disney subscription (typically costing US$7.99 a month) for as low as 90 US cents. Satisfied customers chimed in with enthusiastic reviews: “Five stars again”, “excellent”, “all good. I am satisfied, keep going man”. As competition for customers among streaming services heats up, so has the proliferation of online marketplaces where passwords are being sold illegally at bargain prices, according to companies that manage digital content protection for Hollywood studios. These illicit marketplaces have sprouted in response to the popularity of password sharing – a growing headache for streamers that rely on subscription revenue to finance the rising cost of producing content. Unlicensed video games in China banned from live-streaming platforms The losses are steep. Account sharing and piracy cost streamers and pay-TV providers US$9.1 billion in lost revenue in 2019. That’s expected to grow to US$12.5 billion by 2024, according to market research and consulting firm Parks Associates. Some experts say those estimates are conservative. A Citi analyst estimated streaming services lose roughly US$25 billion a year to password sharing, with Netflix representing 25 per cent of that amount. “In the past, credential sharing has been tolerated because it’s a form of growing your audience, the popularity of your brand and your service,” says Ken Gerstein, vice-president of sales at Nagra, a Swiss company that advises streamers and others on antipiracy measures. Netflix last month took a major step to crack down on password sharing among people who don’t live in the same home. The streamer said it was testing features that would allow its subscribers in Chile, Costa Rica and Peru to add up to two users outside their household, for an additional US$2 or US$3 per account. While Netflix’s subscription plans are popular, there has been confusion among consumers about when they can be shared, executives say. “As a result, accounts are being shared between households – impacting our ability to invest in great new TV and films for our members,” Chengyi Long, a Netflix director of product innovation, wrote in a blog post last month. She added that the company would monitor the tests before rolling it out to other countries. Tencent to close video game streaming unit in the wake of failed Douyu, Huya merger Last year, Netflix also tested a prompt during the login process that would remind some nonpaying viewers that if they don’t live in the same house as the account holder, they would need to get their own Netflix subscription. The streaming service lost 200,000 customers in the first quarter, it said in a results announcement this week, the first time it has shed subscribers since 2011. It had previously said it expected to add 2.5 million subscribers in that period. Netflix plans to create a lower-priced version of its service that has advertising, a big change for the company after years of only offering its films and TV shows commercial free. Co-chief executive officer Reed Hastings brought up the potential for advertising on a call with investors after the announcement. For many years, Netflix and other streamers didn’t seem bothered by password sharing – and even seemed to condone it. In 2017, the company famously tweeted that “love is sharing a password”. But the company’s tolerance for the practice has changed as the company faces more pressure to increase its subscriber base and boost profitability in the face of rising competition. Password sharing has taken off during the pandemic as consumers spend more time at home streaming shows. Many streaming services, such as Netflix and HBO Max, have guidelines that specify each account is for a household, meaning people who live in the same residence. But some consumers have a wider definition of household – to mean relatives who do not live in the same home or friends who want to check out the sci-fi series Stranger Things without paying a full monthly subscription. TikTok owner ByteDance challenges Tencent, NetEase in China’s music-streaming market People who tend to share passwords are mostly aged 18 to 24, according to a study by the Advertising Research Foundation that surveyed 10,400 adults in the US. Younger consumers may be more cash-strapped and looking for ways to save money from paying for multiple streaming services, despite exposing themselves to security risks, especially if they use the same password for other services like a bank account, industry experts said. Although some analysts praised Netflix’s crackdown on password sharing as a necessary step, some consumers balked, citing rising costs. In January, Netflix raised the cost of some of its plans in the US, including its premium monthly plan by US$2 to US$19.99. It is unclear whether other streaming services will follow Netflix. Disney and HBO Max declined to say, while Apple TV+ and Amazon did not respond to a request for comment. One method streamers are using to curb password sharing is two-factor authentication. So when a user logs into their account on a new device, a prompt will ask for a separate code that can be sent to the account holder’s phone. If the person no longer lives in the household – say an ex-boyfriend – they are not likely to give the account holder a call to ask for the code. “The streaming companies are very sophisticated, technology service providers,” says Jonathan Friend, chief product officer of UK-based Friend MTS, which provides content protection services. “So it is fair to say that the majority of these platforms will know what’s going on.” Additional reporting by Bloomberg