Netflix Password Sharing Isn’t As Big A Deal As Quartz Thinks

It’s a nightmare! Quartz is touting a new survey that shows 31 percent (nearly one-third) of U.S. Netflix users are "moochers" — they’re using someone else’s login information instead of paying for the streaming-entertainment service themselves.

That’s a big, scary number at first glance. Imagine the lost revenue for Netflix, which took in $4.2 billion in subscriber revenue in the U.S. in 2015, and is committed to spend $9.9 billion on content over the next three years.

But a more than cursory look indicates that, really, Netflix isn’t losing out on all that much money. Per the Quartz story:

“Young people are, unsurprisingly, the biggest offenders: 69% of people aged 13-17 mooch off someone else’s account, and 50% of 18-24-year-olds are moochers.”

The most obvious issue here is that 13- to 17-year-olds aren’t “mooching” — they actually cannot subscribe to Netflix on their own, since Netflix’s policy indicates you must be 18 or over to do so. (Even if Netflix didn’t have an age requirement, you must be 18 years old to even apply for a credit card or open your own bank account and hold a debit card, which is generally how you pay for your Netflix subscription.)

Those 13- to 17-year-olds also almost exclusively live in a household with a parent or guardian who would be paying for the service. Because these non-potential subscribers were included in the survey, which was conducted by Survata for Quartz, their high rate of moochery is inflating that overall figure of 31 percent.

The 18- to 24-year-olds can indeed pay for their own Netflix accounts, but that stat is a problem as well. More than 50 percent of both women and men 18-24 are still living at home with their parents, according to 2015 data from the U.S. Census Bureau. Many others cohabitate with someone they would likely share an account with.

The fundamental flaw with this kind of survey is that it represents a misunderstanding of both human behavior and how a business like Netflix works. Netflix’s concern isn’t whether every single person who uses its service is paying for it but rather how many households it reaches — much the same way cable companies count subscribers rather than individual viewers.

Instead of cracking down on multiple IP addresses using the service, streaming companies simply limit the number of simultaneous streams and offer you more simultaneous streams for more money. Netflix’s most basic offering ($7.99 a month) allows you to watch on only one screen at a time, while the highest tier offers four streams at the same time for $4 more.

Low-cost products like Netflix experience a lot of churn, and so the rationale behind allowing account sharing is as much about keeping current subscribers as it is snaring new ones down the line — the more people depend on a single account, the less likely the account holder is to abandon the service. Leichtman Research Group’s last estimate of Netflix moochery in January 2015 was 19 percent of subscribers sharing their password with someone who didn’t live with them.

And of course, even the most scrupulous parent would probably agree: Letting your 13-year-old watch “The Emperor’s New Groove” using your account doesn’t make them a moocher.