Cable CEO Is Really Pissed That HBO Hasn't Cracked Down On Streaming Password Sharing

from the get-over-it dept

As HBO’s streaming service popularity has taken off, the company has yet to crack down on the sharing of passwords, believing it’s a great opportunity to have programming junkies market the brand for you. We all of course already knew that sharing HBO Go passwords was a violation of the anti-circumvention clause of the DMCA and an unholy sin. But according to Charter CEO Tom Rutledge, the sharing of streaming service passwords is also a diabolical theft of content that needs to stop immediately.

During the cable giant’s recent quarterly earnings call, Rutledge decided to rant a bit about the perceived injustice of college students using their parents’ passwords, insisting that HBO’s leniency on this front showed a complete misundertanding of the market:

“But to 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.”

But it’s Rutledge who appears to have shown his lack of understanding of the market he serves. The CEO assumes that if you crack down on college kids sharing HBO passwords that these kids are magically going to go out and sign up for cable connections. What’s more likely to happen should you crack down on the practice is that that these kids (most of whom are on a budget) will turn to cheaper streaming alternatives like Netflix — or piracy. But in traditional legacy exec thinking, everybody’s a criminal, even though Rutledge’s company simply refuses to seriously compete on price.

Earlier this year HBO CEO Richard Plepler said the company keeps a close eye on the password sharing stats, and it’s not really a significant number of people. Plepler (the guy Rutledge implies doesn’t understand the market) a year earlier made it clear he understood the market perfectly well:

“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.

So, whereas HBO thinks it’s a good idea to turn the other cheek on a statistically insignificant practice to generate brand obsession, Charter (soon to own Time Warner Cable and Bright House Networks in a $75+ billion merger) thinks it’s a better idea to treat college kids like criminals, and in the process, driving them to Netflix and BitTorrent networks.

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Companies: charter, hbo

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Comments on “Cable CEO Is Really Pissed That HBO Hasn't Cracked Down On Streaming Password Sharing”

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47 Comments
That One Guy (profile) says:

'Don't worry your head HBO, I'll be angry for you!'

“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,”

Unless I’m missing something significant, said content and content companies are HBO’s content and HBO respectively, who if anything seem to have no problem with what’s going on. If HBO wants to shoot itself in the foot, or more accurately draw in more future subscribers, then I’m not seeing what ground the CEO of a completely different company has to be upset.

That One Guy (profile) says:

Re: Ah

Never mind, re-reading the article, I believe I spotted the ‘something significant’ that I missed in my original readthrough that explains why Rutledge is making the claims that he is. Rutledge/Charter offers a competing service, and if people can get their entertainment for ‘free’ from HBO, then they’re much less likely to pay Rutledge for the same.

Thinking long-term works fine for HBO, but if it means that Rutledge is getting less business now, then it makes sense that he’d throw a fit over it. His claims about HBO not ‘understanding the market’ may not stand up under scrutiny, but his motivation for making those claims at least makes perfect sense.

MDT (profile) says:

Re: Re: Ah

Even more than that, I’d say HBO is perfectly aware that they are beating him on price, and that if allowing a bit of piracy that (A) doesn’t affect their bottom line (since those pirates won’t pay anyway) and (B) gives them better reputation than the cable company and (C) gives them MORE leverage over cable companies who need their content to be relevant and (D) contributes to a long term market strategy as opposed to a “What can I do to boost my quarterly bonus” mentality, then I’d say (E) HBO knows exactly what it’s doing and (F) understands the market exactly and is (G) happy to screw over Rutledge and Charter.

MDT (profile) says:

Re: Re: Re:2 Ah

Depends, from the article, the password sharing is going on at campus. I can absolutely imagine a dorm floor going in together on a login. And, Netflix doesn’t really limit multiple logins, or at least, I’ve never had that occur. I watch it on my PS4, and my mother watches it in her room on her tablet, simultaneously. Sometimes I watch from my hotel room, my mom from her room on her tablet, and my wife on the PS4, when I’m on the road. Same with HULU.

I have no issues with a household having one login and sharing it amongst everyone who lives there. But as much as I think ‘must own everything’ is stupid, even I agree that 10 or 12 unrelated people who don’t live together (or at best, are in a dorm situation) sharing passwords is piracy.

MDT (profile) says:

Re: Re: Re:4 Ah

Yeah, it is.

Your logic fails because you are taking a fixed supply (1 pizza with 12 slices) that has a specific lifetime, and applying it to a non-finite source.

If instead, the Netflix account had ‘100 hours of streaming a month’ I would absolutely agree with you that you could do whatever you wanted with that 100 hours.

There has to be a balance between consumer and producer. If the producer is too insane (which Rutlidge obviously is), then nobody respects the company and is happy to see them go out of business.

The attitude that it’s fine to buy one netflix account and spread it out amongst a dozen people because ‘it is just like buying a pizza’ is a result of over-reach by copyright maximalists. But it doesn’t mean that is a correct method of thought.

The problem with this type of response is, you are going anti-copyright maximalist, which just encourages Rutledge to insist on every individual must have a separate account, and demand hundreds of thousands if you and your wife watch at the same time but she doesn’t have an account.

People need to be reasonable on both sides. Unfortunately, being reasonable is not en vogue lately. 🙁

PaulT (profile) says:

Re: Re: Re:5 Ah

A better analogy might be sharing a newspaper. While it’s a physical item, it may be “consumed” by many people, many times over. Be that several people in one house, left on a table at work or in a dorm common rooms for others to read or left in a waiting room or other public area where any number of unrelated people can read the same copy.

Rather than whining that every one of those people should have been buying their own copy and coming up with way to force that, the newspaper industry realised that this was reducing their upfront printing costs – and expanding the number of eyeballs for classified and other advertising. They also recognised the brand awareness it creates – most of those people would not depend solely on the free copy and they would most likely buy the paper they were familiar with from the freebies over a less familiar competitor.

Of course, that model is now dated, but when the business realities of the time dictated that was the best model, they generally accepted it and worked with it rather than forcing sales that may not be possible.

That One Guy (profile) says:

Re: Re: Re:3 Ah

I’m not seeing it. A person paying for a Netflix account and sharing access to it seems little different than someone who pays for a magazine subscription and allows other people to read it.

Now, depending on how their TOS is worded I can see it being a violation of said TOS to share the password like that, but piracy? No.

Anonymous Coward says:

Re: Re: Re:3 Ah

Maybe its different here in the UK but my mother uses my Netflix account and occasionally she has issues accessing it because my Sister also has my password and all three of us were accessing it on a 2 device account.

(Admittedly I have personally only seen the concurrent user limit warning once)

PaulT (profile) says:

Re: Re: Re:3 Ah

“And, Netflix doesn’t really limit multiple logins, or at least”

Depends on your plan. You can be logged in to any number of devices, but your plan will limit the number of devices that can stream simultaneously.

Apart from that limit, they don’t seem to mind where the devices are located. I once accidentally left my account logged into a friend’s computer in a different country and they used it to catch up on a couple of TV shows before I asked them to log out.

“even I agree that 10 or 12 unrelated people who don’t live together (or at best, are in a dorm situation) sharing passwords is piracy.”

I disagree strongly, and let’s stop muddying clear terms even more than they are. Piracy = not paying. This is paying, but potentially using the service in violation of the T&Cs of the provider. A contract breach is not piracy.

Anonymous Coward says:

Re: Re: Re:4 Ah

Well I think the basis of copy protection laws are partly contract law indirectly. If I write a book and I sell you a copy under the agreement that don’t resell that book or give it away and you do then you violated an agreement with me. I agree with our natural right to make agreements. Now there are naturally limits to this. If I say, for instance, that by reading this comment you agree to give me a thousand dollars that’s ridiculous. There is a lot of grey area as well. What about a TOS or EULA that you click I agree to or a ridiculously long agreement that you may get when you buy something simple from the store that no one ever reads. Many courts have ruled that such agreements maybe void for being very one sided just like they have ruled in the past that very one sided contracts given under very casual circumstances maybe void (vs two capable corporations with lawyers to negotiate the agreements). Or what about buying a piece of software that doesn’t allow for returns with no disclosure of the TOS agreement before buying on the box. So you buy this product and later you read the TOS, disagree with it, and wish to take it back? Should you be allowed to take it back or violate the TOS because it’s not something you agreed to before you bought the product? The product requires that you agree to the TOS before using it but it doesn’t seem to require for you to agree to anything before buying the product. I think such practices are rather shady and the fact that these practices seem to be standard these days shows what kinda shady practices our government allows.

But what distinguishes copy protection laws from contract law is if I buy a song from you and agree not to give it to anyone else and then I do give it to some else who agreed to nothing the law can then go after the person I gave it to if they decide to redistribute it. The agreement was only between me and the person that sold me the content and so, at least in terms of contract theory and the concept that we should be allowed to make agreements that should be honored, the law should only allow them to go after me and not everyone else that agreed to nothing.

Anonymous Coward says:

Re: Re: Re:6 Ah

Which part didn’t you understand. I have a few typos in there after rereading but I think it’s still mostly understandable. Here let me fix the typos, perhaps it’ll help.

Second sentence first paragraph should read

If I write a book and I sell you a copy under the agreement that you* don’t resell …

Second paragraph first sentence “some else” should read “someone else”.

Hope that helps.

Anonymous Coward says:

Re: Re: Re:6 Ah

To be clear copy protection laws/principles (as the law creates/enforces them beyond the scope of simply enforcing contract agreements) should only be about promoting the progress of the sciences and useful arts and advancing the public interest. They shouldn’t be about the artist or the distributors.

PaulT (profile) says:

Re: Re: Re:5 Ah

Well, that’s one way of looking at it, and you can say that copyright is a defacto contract between the public and the copyright holder. But, I’d still hold that infringing copyright with no payment to the owner, and breaching a contract for a service you’re paying for are two very different things.

My point is – we’re already dealing with people who insist on equating piracy with theft even though they are totally different concepts. No need to muddy the waters by lumping in paying customers as well.

jupiterkansas (profile) says:

Re: Re: Re:3 Ah

It doesn’t matter if it’s piracy or not.

Those 10 or 12 people living together won’t be living together forever. They’ll each be getting their own accounts after college.

Deny their piracy now, and they’ll find other ways to entertain themselves and you’ve lost them forever.

If I were HBO, I’d be giving college dorms free accounts.

Ed Allen says:

Re: 'Don't worry your head HBO, I'll be angry for you!'

This whole thing strikes me as one business complaining that another business waging a “buy one, get one free”
campaign is luring customers away.

Competition, especially when you never dealt with it before sucks !

Whining just makes customers happier to see Charter lose.

PaulT (profile) says:

“reduced the demand for video because you don’t have to pay for it”

I’m sure he didn’t mean to say “demand” in that context. Maybe the pool of people “willing” to pay for it, but certainly not demand. The sharing may reduce the demand for *cable* but not for video.

“”It’s not that we’re unmindful of it, it just has no impact on the business,”… noting that it could potentially lead to more subscribers in the future.”

..and there we have one of the most sensible things said on this subject by a legacy provider. Parents aren’t going to share their passwords forever. Once the student graduates, they’re most likely to turn to the services they’re most familiar/happy with. If HBO gets them now, then after graduation they’ll have 2 sets of subscribers (the parents and the student). Treat them poorly, and you may only have one (or zero, if the parents can’t justify the premium now that less people are using it).

This, of course, is a long-term strategy that requires understanding of your audience, so it’s not surprising that some in the industry are able to think that way. But, kudos to Plepler for understanding that.

Lord_Unseen (profile) says:

“We’re in the business of creating addicts,” he said.

That quote alone tells me HBO knows what it’s doing. They’re pulling the long con and they know college kids tend to mooch of their parents. So, when their parents cut them off in a few years, they’re still going to want to watch their Game of Thrones and HBO now is more convenient than piracy. Guess what they do then?

WDS (profile) says:

Which is he complaining about?

There have been two different college situations mentioned. If it a situation of a large group of kids buying one Go subscription and then sharing it, I see how someone could consider that a problem.

If it is college kids with the password for their home account then that seems exactly what that is designed for. While in college they are still in most cases for legal purposed residing at their parent’s house. The HBO login is designed to allow you to watch content while away from home. The fact that they are away from home for four years is only a detail.

ltlw0lf (profile) says:

Re: Which is he complaining about?

If it is college kids with the password for their home account then that seems exactly what that is designed for. While in college they are still in most cases for legal purposed residing at their parent’s house. The HBO login is designed to allow you to watch content while away from home. The fact that they are away from home for four years is only a detail.

This, and the fact that most Dorms won’t allow you to wire cable or run satellite dishes. They may have cable, but in many dorms I’ve been to, the cable is run to a central location or a “break” area and not into the rooms themselves. Unless you are in a new or newly remodeled dorm, you don’t have cable, wired internet, etc.

You have wireless, offered by the school, or you have a central area where you can sit and watch cable.

Cutting off access to HBO isn’t going to make students go out and buy a connection because they can’t. Just like anyone who has lived in a old apartment complex or a high-rent Home-Owners Association development…you can’t just go out and buy cable unless city hall lets you, and you can’t fight city hall.

By keeping the students hooked while they are in school, HBO only assures that they stay hooked when they move out. Cable CEO is the one who has lost all sense of marketing reality and just is in it for the short term greed and not looking at the long game.

That One Guy (profile) says:

Re: sharing is illegal?

Possible but unlikely, with enforcement being even less likely. It would depend on how the terms are worded and how they deal with multiple users for a single account, but assuming it did prohibit more than a certain number from having access, and if a prosecutor really felt like it, it’s possible they could bring charges under the CFAA for ‘unauthorized access’.

Anonymous Coward says:

“What’s more likely to happen”

What may also happen is that some of their parents will stop subscribing to the services. For instance we have a Netflix account of four and everyone that uses it splits the bill. Chances are that some of those kids also do the same with their parents and part of the reason they get it is because they have the opportunity to share usage. Cracking down on it may make the HBO offer less convenient to those that don’t share their passwords (more security = more inconvenience to legitimate users) and it will make it less likely that more than one person will pitch in to share an account resulting in fewer subscriptions.

Tom Mink (profile) says:

Reaching an unreachable market

Generally, students in residence halls don’t have a choice on their cable provider or package. If the school didn’t sign up for HBO, then kids living in the dorm are out of luck (outside of torrenting individual programs of course). If anything, this HBO trying to keep parents as subscribers that might otherwise drop the service when their kids leave for college.

Anonymous Coward says:

Here is the point about cable. Yes, you hate them, yes, you want to stop buying from them, yes, you hate the fact that you don’t want them to be anything more than dumb pipes and you cut the cord.

Who the hell do you think provides the bandwidth so you can stream your HULU/HBO/Netflix/XBOX/PS4 or whatever else you want?

Ummmm, the cable company. Cord cutting? Ha.

Anonymous Coward says:

“Piracy”

Publishers often refer to copying they don’t approve of as “piracy.” In this way, they imply that it is ethically equivalent to attacking ships on the high seas, kidnapping and murdering the people on them. Based on such propaganda, they have procured laws in most of the world to forbid copying in most (or sometimes all) circumstances. (They are still pressuring to make these prohibitions more complete.)

If you don’t believe that copying not approved by the publisher is just like kidnapping and murder, you might prefer not to use the word “piracy” to describe it. Neutral terms such as “unauthorized copying” (or “prohibited copying” for the situation where it is illegal) are available for use instead. Some of us might even prefer to use a positive term such as “sharing information with your neighbor.”

A US judge, presiding over a trial for copyright infringement, recognized that “piracy” and “theft” are smear-words.

Uriel-238 (profile) says:

Re: Piracy is actually kinda romantic.

In the golden age of men attacking ships on the high seas, they were usually attacking the Spanish Main and the East India Company, who were both indulging in abuses of their own (e.g. massacring or enslaving the natives in the new world)

Later, Oyster Pirates would fish for oysters without rights (used to secure a monopoly to inflate oyster prices) so that restaurants and their customers could enjoy oysters at a reasonable price.

And now, media pirates (in Europe, simply the sharing community) provide media access to those who can’t afford the prices set by the studios and labels that they haven’t paid for, themselves, not only ripping off the artists via Hollywood Accounting but also demanding that everyone re-purchase media with every new conveyance system (45, LP, CD, DVD, Blu-Ray, .mp3 et al).

The molestations of the sea by jolly pirates are nothing compared to the molestations of the world by the emperors in Hollywood.

So some of us are glad to chip away at their fat and ill-gotten profits.

Hey ho ho
Youll cruise to foreign shores<br />And youll keep your mind and body sound
By working out of doors
True friendship and adventure are what we cant live without<br />And when youre a professional pirate
Thats what the jobs about!

cryophallion (profile) says:

Nothing Happens in a Vaccum

So, I think it’s fascinating to take the comments in light of this ars article: http://arstechnica.com/business/2015/10/hbo-ceo-doesnt-get-why-isps-like-comcast-wont-embrace-hbo-now/

HBO WANTS them to embrace their service. They want it bundled even. So, either Charter’s CEO is not wanting to partner with them because they don’t fight “piracy”, and using that as his excuse, or perhaps he’s mad because he didn’t partner with them when he could.

Either way, I have a great idea! Let’s demonize one of major cost upgrade services we’ve used to sell and bundle and upsell for years! It’s brilliant! HBO has made them tons of money, and this is how they reacted. Spoiled much?

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