Netflix CEO 'Loves' Netflix Password Sharing

from the customers-not-criminals dept

For a few years now, HBO has turned a blind eye to users that decide to share their passwords for HBO Go (the streaming app for existing cable providers) and HBO Now (the standalone streaming app for cord cutters). Last year HBO CEO Richard Plepler said the company keeps a close eye on the company's password sharing stats, but said the sharing isn't a huge phenomenon. Besides, as the CEO argued in an interview a few years back, the act of sharing passwords can be seen as a new form of marketing the brand, and a tool to create a new generation of addicts:
"It’s not that we’re unmindful of it, it just has no impact on the business,” HBO CEO Richard Plepler said. It is, in many ways, a “terrific marketing vehicle for the next generation of viewers,” he said, noting that it could potentially lead to more subscribers in the future. “We’re in the business of creating addicts,” he said.
Contrast that to legacy cable operators like Charter Communications, which recently declared that the sharing of login credentials was a diabolical menace. According to Charter (who'll soon be paying $79 billion to acquire Time Warner Cable and Bright House Networks), password sharing is a scourge, and HBO is a fool for turning a blind eye to such brazen "theft":
"But to (Charter CEO Tom) Rutledge, companies like HBO show a "complete lack of control and understanding in the space" by letting password sharing continue, and it's something that must be stopped. "The lack of control over the content by content companies and authentication processes has reduced the demand for video because you don’t have to pay for it,” Mr. Rutledge said on the earnings call. “That’s going on in the college market."
Of course automatically seeing everyone as a thief hiding in the shadows is a sort of rite of passage for cable and broadcast executives. And again, contrast Charter's statement to comments made at CES last week by Netflix CEO Reed Hastings, who proclaimed the company "loved" the idea of password sharing:
"We love people sharing Netflix," CEO Reed Hastings said Wednesday at the Consumer Electronics Show here in Las Vegas. "That's a positive thing, not a negative thing."...A lot of the time, he said, household sharing leads to new customers because kids subscribe on their own as they start to earn income.
Note that like HBO, Netflix's love of sharing only goes so far; the company's base $10 version restricts your account to two simultaneous streams, which bumps to four should you pay for the company's $12 plan. HBO similarly informs its users that it limits the number of concurrent streams per account for "security reasons." Still, perhaps there's a lesson buried in here somewhere about not automatically treating potential customers like diabolical criminals?
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Filed Under: marketing, password sharing, reed hastings, richard plepler, streaming video
Companies: hbo, netflix

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  1. identicon
    Anonymous Coward, 14 Jan 2016 @ 11:14am

    Re: Re: Re: Some Netflix users have sub-accounts

    I would guess they removed it because some of their assumptions from when they developed it proved incorrect. Sub-accounts are a natural feature for them to develop. Parents are going to want to their kids to be able to use their Netflix, and to keep their stuff separate from their kids stuff. However the assumption is that as the kids grow up, either they'll voluntarily stop using their parent's account and get their own, or their parents will kick them off the account, forcing them to get their own. The natural result would be an increase in Netflix subscribers with no action required on Netflix's part.

    Things probably weren't playing out like that in reality. Children who grew up and moved out didn't have any real incentive to get their own Netflix account unless their parents stopped using Netflix. Netflix could charge or charge more for sub-accounts, but they would be bashed for raising prices, drive away people who "couldn't afford" the price increase, and generally get a round of bad publicity... and they still wouldn't have a strong incentive for people to get their own subscriptions instead of continue to use their parents' subscription. As long as the cost of a sub-account was less than the cost of a main account, the economics would not favor Netflix. It would be easier, and more cost effective for kids or roommates to directly pay their parents or the subscriber for the cost of the sub-account, rather than get their own more expensive main account.

    So they removed the sub-account feature. The blow back they got for loss of the feature was likely smaller than it would have been for charging as much for a sub account as for a main account. And they get they get a real incentive for people to gravitate towards getting their own account.

    I suppose as you say they could have tried facilitating people upgrading their sub-account to a separate main account. I'm not sure that would have provided the desired results. Netflix wants people using someone else's account to get their own subscription over time. Sure your suggestion would have removed a barrier to them doing so, but it would not give them the same incentive to do so.

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