Max to Start Cracking Down on Password Sharing, Too

Max will become the latest streamer to cut down on password sharing, as Warner Bros. Discovery plans to start its crackdown in late 2024 into 2025.

Speaking at the Morgan Stanley Technology, Media & Telecom conference, J.B. Perrette, president and chief executive global streaming and games at Warner Bros. Discovery, announced plans to limit password sharing, citing Netflix’s crackdown, which he said was “implemented extremely successfully.” All of this is part of WBD’s several-part plan to build streaming profits.

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“We’re going to be doing that starting later this year and into ‘25, which is another growth opportunity for us,” Perette said of the password-sharing crackdown.

Asked how big of a revenue opportunity the password-sharing crackdown represents, Perette said it’s “a meaningful opportunity,” but was cautious on “overselling it” given given the comparison of Netflix’s 260 million subscribers and longer history to Max’s 97.7 million.

“I’m conscious of not overselling because you see Netflix’s success. Netflix was in market for 17 years. That means people were sharing passwords for 17 years. We’ve been in the market for four, if you count the HBO Max launch, and obviously we’re not quite at the same scale. But we think, relative to the scale of our business, it’s a meaningful opportunity.”

WBD posted a full-year streaming profit for 2023, a rarity among the Hollywood media conglomerates, but in the fourth quarter, the streaming segment posted a loss of $55 million in adjusted earnings before interest, taxes, depreciation and amortization, compared with a year-ago loss of $217 million.

The goal is to maintain a consistent profit in this segment, which Perette said the company believes it can achieve through further globalization, given that 80 percent of the company’s revenue is still based in the U.S., as well as broadening the advertising tier, which launched in the U.S., into Europe and Latin America.

Additionally, he pointed to an improving content slate over the next 18 to 24 months, which includes season two of House of the Dragon in June and next year, season two of The Last of Us, the second season of Euphoria, and the third season of The White Lotus.

“Unfortunately, we launched Max in the U.S. and in the eight months following, for a variety of reasons — some that we knew about, some related to the strike — we went into probably the lightest content slate we’ve ever had,” he said.

While Netflix was the first streamer to enact a password crackdown, which helped translate to a surge of 13 million new subscribers in the most recent quarter, Disney has also said it will start to enact a password-sharing policy.

Disney has already updated its subscriber agreement for Disney+, as well as Hulu, to ban account sharing for new subscribers starting Jan. 25, and for existing subscribers starting March 14. And last month, Disney CFO Hugh Johnston said that starting this summer, Disney+ account holders will be “presented with new capabilities” that allow account-sharers to start their own subscriptions.

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