Netflix loses $6B a year in revenue due to password sharing: analyst

Netflix Los Angeles Headquarters
As part of the account verification tests, Netflix is offering a 30-day free trial. (Netflix)

Netflix and other U.S. streaming video services lose about $25 billion a year in potential revenue due to password sharing, according to Citi analyst Jason Bazinet.

He estimated that Netflix accounts for about 25% of that total, meaning that the streaming giant is possibly missing out on around $6 billion in revenue.

Netflix reported $25 billion in annual revenue for 2020, up 24% year over year, so another potential $6 billion would represent a significant increase. The company is currently testing a feature that cracks down on password sharing among its users by asking them to authenticate account access via email or text. It’s unclear how much lost or untapped revenue the move could generate for Netflix but Bazinet said, “thwarting this theft will be of growing importance for shareholders.”

RELATED: Netflix may start cracking down on password sharing

The account verification tests were spotted earlier this month by GammaWire, which estimated that the tests were still fairly small in scope. Variety confirmed the tests with Netflix.

“This test is designed to help ensure that people using Netflix accounts are authorized to do so,” the company said in a statement.

As part of the tests, Netflix is offering a 30-day free trial. That comes after last year Netflix moved to end free trials in the U.S.

“We’re looking at different marketing promotions in the U.S. to attract new members,” a Netflix spokesperson told The Verge. The company started phasing out free trials in the U.S. in October 2020.

Last year, Netflix added a new webpage featuring free access to “Murder Mystery,” “Élite,” “Boss Baby: Back in Business,” “Bird Box,” “When They See Us,” “Love Is Blind,” “The Two Popes,” “Our Planet” and “Grace and Frankie.” The feature only offers the first episode of season one of the available series and it’s only available PCs and Macs (via a web browser) or with an Android device.