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Netflix co-founder on a potential password sharing crackdown: 'You’re not scared, are you?'

Streaming giants and cable companies, led by Netflix (NFLX) and HBO (T), are reportedly considering ways to crack down on password sharing among streaming users.

“You’re not scared, are you?” Netflix Co-Founder & First Netflix CEO Marc Randolph told Yahoo Finance’s YFi PM, later adding: “You know there’s abuse and that’s not fair.”

It’s common among streamers to share platform passwords with their friends and family to cut costs and ensure easy accessibility— but Randolph says now the time has come for a crackdown because of what he calls “broad cases of flagrant abuse.” According to a recent research note from MoffettNathanson, about 14% of Netflix users report they are using a password from “someone outside of my household.”

Netflix user Curtis Khan poses for a photo with his tablet where he often accesses his Netflix account, Thursday MAY 16. (Photo: Tara Walton/Toronto Star via Getty Images)

Several measures are being considered to try to stop this from happening, including “requiring customers to change their passwords periodically or texting codes to subscribers’ phones that they would need to enter to keep watching,” according to Bloomberg. And if those tactics don’t work, Bloomberg noted, subscription services may turn to using thumbprints for logging in.

“I don’t think we’re talking about people coming into your apartment and putting you up against the wall and saying: ‘Show us your credentials,’” Randolph said.

Randolph explained that from Netflix’s inception, it was meant to be flexible and easily accessible. 

“There’s abuse and that’s not fair,” he said. “But the whole time you want to make it easy for people to be flexible.”

‘I pay for all of my accounts’

Password sharing deprives the streaming giant of at least $2.3 billion in revenue on an annual basis, Yahoo Finance previously reported. Among all of the pay-TV industry, an estimated $6.6 billion could be lost by the end of 2019 from password sharing and piracy and could grow to $9 billion by 2024.

As the streaming wars heat up, cracking down on password sharing could be a potential opportunity for these streaming platforms to increase revenue. At the same time, though, this might deter people from returning to the service if they are unwilling to pay for their own account.

Getting new subscribers hasn’t been an issue for Netflix. In its third-quarter earnings report last month, the company disclosed there were 6.8 million new subscribers. Netflix is expecting a total of 7.6 million global subscribers for the final quarter of the year.

(Photo by Nasir Kachroo/NurPhoto via Getty Images)

For users who aren’t sharing their passwords on streaming services en masse, Randolph stressed that they should not be penalized by companies implementing new policies trying to prevent it. 

“You know we travel, we have family who’s living in different places and so the problem — the very beginning was like this, you don’t want to put in place barriers that impede people who are trying to do the right thing,” he said. “Again, I don’t know what the policy is specifically, but I’m not worried. Well, I pay for all of my accounts.”

Kristen Despotakis is an associate social media editor for Yahoo Finance. Follow her on Twitter @krisdespotakis.

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