Parks: 20% of young adults steal passwords for OTT service, cost video industry $500M

Putting a size on the security exposure for authenticated streaming video services, Parks Associates said that 6 percent of U.S. broadband homes use a video service that belongs to someone living outside the home.

The cost of this digital piracy amounts to $500 million a year, the research company claims in its latest report, The Cost of Piracy.

Password stealing/sharing is particularly prevalent among adults 18-24, the report says, with 20 percent of that young-adult group using a password that belongs to someone they don't live with. The unethical behavior declines as the demographics get older, with only 10 percent of adults 25-34 admitting to this kind of piracy.

For a pay-TV industry still looking for traction for TV Everywhere, so much unauthenticated viewing may not be a good thing.

"Live-streaming usage has garnered media attention recently, but credential sharing is also a popular form of piracy in the connected world, one that has received varying responses from service providers and content owners," said Glenn Hower, research analyst, Parks Associates. "Credential sharing has a measurable impact on video services, particularly in the OTT video service area, where young subscribers are active. The impact on OTT video revenues is especially troublesome as OTT providers are investing large sums of money to boost their original content offerings."

Parks' report also measured usage of social video sharing tools Meerkat and Periscope, which have been used to illegally share broadcast events, such as HBO's April Game of Thrones season premiere. 

Parks also released data in May showing the password-sharing problem is particularly acute among leading SVOD services, with 11 percent of Netflix (NASDAQ: NFLX) viewing and 10 percent of Hulu usage coming from stolen/shared authentication.

"While credential sharing predominantly impacts OTT service revenues, the process will affect pay-TV operators in a similar fashion as they develop and deploy their own OTT and TV Everywhere offerings," Hower said. "The motivation for credential sharing is primarily economic, and a move to consolidate video service subscriptions among family and friends stands to impact digital video services of all types in the near future."

For more:
- read this Parks Associates press release

Related articles:
Sharing Netflix, other SVOD accounts is prevalent among OTT households--but how much it matters is relative
Parks: 7% of U.S. homes have broadband and OTT but no pay TV
Parks: 51% of U.S. pay-TV homes 'very interested' in unlimited DVR storage