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OTT Service Credential Sharing Costs the Industry $500M in 2015

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It's a familiar story: a student leaves for college and takes his parents' Netflix password with him. He's still a member of the household and no one considers it piracy, right?

According to a newly released report from Parks Associate, that kind of credential sharing will cost the online video industry $500 million in 2015 alone. Parks found that 6 percent of all broadband-enabled U.S. households use a streaming video service that's paid for by someone who doesn't live at that address. The problem is far larger with young adults: 20 percent of streaming video viewers between the ages of 18 and 24 use a service paid for by someone outside of their household. That number drops to 10 percent for people between the ages of 25 and 34.

"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,” said Glenn Hower, a research analyst with Parks Associates. “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.”

In the report—"The Cost of Piracy"—Parks offers a five-year forecast of revenues that will be lost due to credential sharing. The report sells for $3,200.

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