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From Cutting the Cord to Cutting Off Friends and Family


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April 16, 2023

A few years back, there was a huge push for "cord cutting" where people would trade the overly priced Cable or Satellite Service for an "internet only" package and only purchase the streaming services that they watched. Stories of people saving hundreds of dollars a month prompted a huge ground swell of people declaring that they cut the cord and moved to streaming only. In the chart below, it is evident that the number of people leaving cable has more than doubled since 2017 and continues to do so.

The idea of cutting the cord and only using a streaming service was particularly helpful for the younger generation of workers who were trying to enter the real world financially while also staring down the barrel of a massive monthly student loan payment. They could find an apartment with internet service included and get the password from mom and dad's Netflix, Hulu, or any of the other services, then they could watch anything "for free." Some people would gather up a group of friends and split the cost for one person to sign up.

However, good things don't always last. Netflix hinted back in 2019 that they knew a "small percentage" of users were password sharing and they were investigating ways to prevent it. It was assumed that the price increases "baked in" the anticipation of password sharing. From 2014 to 2023, the price increase for Netflix's Basic package has been 25% over the 9-year period, while the Standard and Premium packages have increased 72% and 67% respectively. The number of users sharing their password has also increased in kind. Back in 2019 around 27% of users admitted that they shared, but today it's over 40% (that equates to almost a 50% increase of users who admit to sharing). After a few years of Netflix trying to figure out a solution, it has officially arrived. There is now a two-factor authentication to continue to stream if someone logs in from an IP location outside of the primary address after more than 31 days.

So, there is still a way to share with a friend or family member, but the days of 10 friends chipping in a couple bucks a month to share are most likely gone. That is unless the primary owner likes getting texted multiple times a month to verify each participants updated login.

Not all streaming services are created equal, though. There are a handful of streaming services that are not monitoring password sharing, yet. So, if someone uses Peacock, Paramount+, Disney+ or HBO Max, they can share their password. Some of the bigger names like YouTubeTV and Apple TV+ have added a "family share" feature so streamers can share with others outside of their primary residence if they are added to the "family." It will be interesting to see how the streaming wars settle out in this one area. In the meantime, the cord cutters for certain services like Netflix need to cut off some of their friends and family and inform them that it is time to get their own login.

Source: https://www.cablecompare.com/blog/key-cord-cutting-statistics-in-2021

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About the author

Brian Watson

Brian Watson

Vice President, Private CFO®

Brian is a true Atlanta native and graduated from Walton High School. He got his Bachelor's degree in Business from Samford University in Birmingham, AL and then his Master's degree from Beeson Divinity. He is blessed to be married to his best friend, Jen, and they have 4 amazing kids (age range 7-13). He is active in his community by serving as a deacon at Johnson Ferry Baptist Church and helps lead their Children's Worship Service called Kid's Church. He is a baseball and soccer coach each season through the Upward sports program and even serves on the board for his kid's school, East Cobb Christian School. And if there is ever any free time from all this, he likes to run with his dog or sit on the back deck with friends/family or just read a good book.

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Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. oXYGen Financial is not affiliated with Kestra IS or Kestra AS. Kestra IS and Kestra AS do not provide tax or legal advice. https://Bit.ly/KF-Disclosures

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