Streaming services such as Netflix, Hulu and Amazon are increasingly fighting for eyes — upping content spends and rounding out studios. But industry leaders are fighting a different battle for dollars with their youngest viewers.
Streaming subscribers are sharing passwords and skirting systems in increasing numbers, creating an increasingly expensive problem for streaming services. Getting content in front of the addressable market can help to convert potential customers and inflate marketable metrics. But as younger users grow up used to accessing streaming services for free, the companies have to consider when and where to draw the line on password sharing.
"The cat is out of the bag," said Jill Rosengard Hill, executive president at media research firm Magid, in an interview with CNBC. "I wish I had a solution, because it's really hurting the business model and monetization of these premium high value services."
Hill and Magid said 35 percent of millennials share passwords for streaming services. That's compared with 19 percent of Generation X subscribers and 13 percent of Baby Boomers. Take those password-sharing rates, the tens of millions of paying subscribers for various services and the monthly subscription cost of a service like Netflix, and that can add up to hundreds of millions of dollars in potential revenue that streaming companies aren't booking.
Media experts struggle to pinpoint an exact cost, and Netflix and HBO executives have gone on record to dispel concerns. Netflix CEO Reed Hastings said in 2016 password sharing "hasn't been a problem" and could convince new users to buy in. HBO CEO Richard Pleper said something similar in 2014, saying, "It's not that we're ignoring it, and we're looking at different ways to affect password sharing. I'm simply telling you: It's not a fundamental problem."
But experts agree the problem is worsening.
One 20-something Twitter user told CNBC recently she consistently signs in with the HBO GO login of a one-night stand she met in 2013, because he left his credentials saved on her browser.
A CNBC coworker said she continued to use the Netflix password of a guy she had been dating even after he added a user profile to his account for the new woman in his life.
Another person, who asked for anonymity, told CNBC she stopped using credentials her boyfriend gave her, after finding out they belonged to someone the boyfriend knew in high school who had died.
"Millennials in particular want ease of access and ease of use on their dime at their convenience," Hill said. "They're embracing it — the ability to customize and curate their video portfolio or their video access."