Too Much Free Time
For years, streaming video operators like HBO and Netflix have taken a relatively-lax approach to password sharing. Netflix CEO Reed Hastings has gone so far as to say he "loves" the practice, and sees it as little more than free advertising. Execs at HBO (at least before the AT&T acquisition) have made similar arguments, arguing that young users in particular that share their parents' password get hooked on a particular product via password sharing, then become full subscribers down the road. In short, they see it as added value for the consumer, and have repeatedly stated it doesn't hurt them.
On the other side of the equation sits Charter CEO Tom Rutledge, one of the highest paid execs in media. He, in contrast, has long complained that he views password sharing as "piracy", and has consistently promised to crack down on the practice. Rutledge and his fellow executives gave a particularly rousing "get off my lawn" lecture at a media event a few years back:
"There’s lots of extra streams, there’s lots of extra passwords, there’s lots of people who could get free service,” Rutledge said at an industry conference this month...“It’s piracy,” Connolly said. “It’s people consuming something they haven’t paid for. The more the practice is viewed with a shrug, the more it creates a dynamic where people believe it’s acceptable. And it’s not."
Except it is acceptable. For one, most of these services include password sharing as part of their business model; they include limits on the number of simultaneous streams that can be running under any one account to prevent sharing from undermining too many new sales. And the companies that have been embracing the practice say they've seen no negative impact from it. Again, it's free advertising and a consumer-friendly practice that's factored into the business model. It's certainly not, as Rutledge has often suggested, synonymous with "piracy."
Undaunted, Rutledge has been trying to build a coalition of industry allies focused on stomping out the nefarious practice of password sharing. And as the company strikes programming deals with partners, it's ensuring that a ban on such sharing is part of the process. One big partner in this initiative is Disney, which is expected to put the kibosh on password sharing when it launches its new Disney+ streaming service this fall. All the while, Charter executives are running around calling the practice of password sharing "insane":
"Ultimately our goal is that we can get an alliance of a large enough group of programmers and operators to protect the value of the content that people produce and the content that we distribute and we pay for,” Chris Winfrey, Charter’s chief financial officer, said last week at the Bank of America Merrill Lynch 2019 Media, Communications & Entertainment Conference in Beverly Hills.
Winfrey severely criticized programmers that turn a blind eye to the practice of password sharing, claiming such practices are “insane."
“To think that it doesn’t impact the way we get paid, it does,” Winfrey said. “And it conditions the entire marketplace to think that content should be devalued, it should be free, and that’s the way it is and I shouldn’t have to pay for it. It’s our firm belief that we’d be growing and growing significantly [if it wasn’t for password sharing]."
Except it's not "free," for the reasons outline above. And while you might gain some additional revenue by banning password sharing, you might also lose subscribers to companies that actually value making consumers happy. Charter Spectrum is, if you'd forgotten, statistically one of the least liked companies in America for a long list of reasons, from mindlessly jacking up prices to providing some of the worst customer service of any company, in any industry in America (think about that accomplishment for a second). Blaming all of its problems on the fact people occasionally share streaming TV passwords reflects the entitlement mindset that's pretty common in the too big to fail, government-pampered telecom and broadcast sector.
Filed Under: password sharing, streaming, tom rutledgeCompanies: charter, hbo, netflix, spectrum