Charter Spectrum's CEO Continues To Whine About Streaming Password Sharing

from the get-off-my-damn-lawn dept

For years now, streaming video providers 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” password sharing, and sees it as little more than free advertising. Execs at HBO (at least before the AT&T acquisition), have similarly viewed password sharing in such a fashion, 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 once they actually have disposable income.

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 last year:

“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.”

Of course it’s far from “piracy” if it’s being sanctioned by the companies doing it, with an eye on generating product awareness and happy customers. That last bit is something Rutledge could use some lessons on. Rutledge fixates on password sharing when he should be focused on why exactly his company continues to bleed subscribers to these cheaper, more flexible traditional cable alternatives. Hint: endless rate hikes, historically terrible customer service, and megamergers

Last week Rutledge was at it again. During his company’s latest earnings call, Rutledge proclaimed that streaming providers like HBO and Netflix clearly “don’t know what they’re doing” because they’ve refused to crack down on the villainous practice of password sharing:

“By the content companies going over the top without having the experience of being distributors, they?ve done that in a way without securing their content, which any distributor would theoretically do if they knew what they were doing. But that hasn?t been the case, so you have free service all over the country through passwords,? Rutledge said. ?The reality is television can be had fairly easy without paying for it.”

Granted just because television can sometimes be “had fairly easy without paying for it” doesn’t mean it’s bad, or it’s “piracy.” Millions of users increasingly are flocking to over the air antennas as an alternative to the bloated, expensive cable bundles execs like Rutledge simply can’t move on from. It’s worth noting that this is a “problem” that really isn’t. Most streaming services already limit simultaneous streams per account, and being able to share your password with a limited set of friends and family members is part of the value equation you’re paying for.

It’s also worth noting that when HBO or Netflix execs acknowledge the trend, they note there really aren’t all that many users actually doing it. As such, if there’s something Rutledge wants to spend several years hyperventilating over, it should probably be his company’s continued failure to actually listen to consumers, and offer a better product with support that isn’t ranked among the worst of any company, in any industry in America.

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Companies: charter, charter spectrum

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Comments on “Charter Spectrum's CEO Continues To Whine About Streaming Password Sharing”

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62 Comments
That One Guy (profile) says:

'Try one FREE!', hardly a new concept

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."

With that definition of ‘piracy’ I wonder if he gets similarly huffy about the radio, libraries, free samples in stores, magazines in the waiting rooms of businesses, or other instances of experiencing content without paying for it?

For someone playing at being the smart one it’s rather funny that he apparently can’t grasp the idea that companies like netflix understand that if someone gets a taste of their service when they don’t have the money to pay they are much more likely to pay when they do have the ability to, ensuring a steady stream of new customers.

Iggy says:

Re: Re: 'Try one FREE!', hardly a new concept

Talk about irritability. The highest paid CEO thinks he gets to tell his competitors what business model to use. He thinks he gets to define what property is (therefore what piracy is). He thinks he’s entitle to a continued revenue stream in the face of changing economics.

The highest paid CEOs seem to be the most entitled.

Anonymous Coward says:

Re: 'Try one FREE!', hardly a new concept

“It’s people consuming something they haven’t paid for.”

And obviously Saint WhatsHisName rushed out and purchased a new recording of every song he ever heard on the radio, faithfully and without fail.

It’s the cardinal rule for running one of these media companies – Lead by example.

And also – look after the widows and orphans.

Mike Masnick (profile) says:

Re: Re: Next Up

And make sure you don’t get up and use the restroom during a commercial break. That’s stealing!

In case anyone thinks this is an exaggeration/joke, back in 2002 the head of Turner Broadcasting, Jamie Kellner made exactly this argument, that going to the bathroom during commercials was a form of theft, though he said "I guess there’s a certain amount of tolerance for going to the
bathroom" but if someone did that too often, then it was clearly theft to him.

Anonymous Coward says:

Re: Next Up

Who was it .. Comcast I think, was and probably still is researching the addition of a camera to their set top box(es) pointed at the audience to determine the quantity of people watching, presumably for billing purposes. They said it was only for a count and was not actual video .. or something like that. LOL – I do not believe them.

JoeCool (profile) says:

Why

I imagine he’s harping on this because Charter is really pushing their own streaming service. They’re downright obnoxious about it. They still call me at least twice a week, and send me crap in the mail trying to get me to buy their streaming. In fact, the just recently took it to the next level: I heard a knock on the door a few weeks back. There was a Charter/Spectrum truck in the driveway.

Him: I’m here to set up your streaming service.

Me: I didn’t request any streaming service. I specifically turn it down every time they ask.

Him: You’re down on the schedule for a home installation. /shows a work order/

Me: Don’t care. Don’t want it. Go Away. /slam door in face/

He showed up AGAIN the next day, remembered what happened, and pulled out of the driveway without coming to the door. 🙂

That One Guy (profile) says:

Re: Why

No wonder he’s throwing such a fit about ‘try before you buy’, with service like that the number of people who would want to sign up after having tried if beforehand must be rather low, and seeing companies like Netflix succeed has got to really stick in his craw, hence the whining.

I do feel sorry for the installation guy being jerked around like that by them, must be a fun time being made to look like a fool showing up to install something people didn’t ask for and/or want.

Bryce Katz (profile) says:

Netflix IS doing "something about this"

Netflix limits the number of concurrent logins to their system, referred to as “screens” in their account management. If you’re on a two-screen plan, only 2 devices can be logged on to Netflix at any given time. If I want more concurrent connecting, I have to up my subscription, which means I’m paying for what is being used.

PaulT (profile) says:

Re: Re: Re: Netflix IS doing "something about this"

“and pay more for more streams”

…and that’s the key. It’s likely easier to get you to add a couple of extra dollars down on your existing service than it would be to get your dad to sign up for his own service at full price.

He’s making the classic mistake of thinking that all usage that isn’t paid for directly represents lost income at full price, yet the reality is probably that they’re making more money than if they blocked you from sharing.

PaulT (profile) says:

“It’s people consuming something they haven’t paid for.”

No, it’s not. Your customer has paid to have streaming to their devices. The product is paid for. You don’t get to be paid multiple times for the same service because you don’t like the way people use it.

If I buy a DVD and then let someone else watch my copy when I’ve done with it, that doesn’t mean that a copy has been pirated. If I give my copy of a newspaper to the next guy in the break room, that doesn’t mean a publisher is owed money If I let someone use my car while I’m at work, that doesn’t mean a rental company is owed money, It’s just the way life works.

If you think that it’s not, it’s no wonder you’re seeing failing business, as you’re chasing shadows.

“”By the content companies going over the top without having the experience of being distributors, they’ve done that in a way without securing their content”

No, they really haven’t. You need a valid login to access the content – *somebody* is paying for that access. According to the account, you will be restricted as to how you can access the content, be that which items are downloadable, how many devices or locations can be streamed from at once, etc. The content itself is secured, you just don’t like the fact that someone can pay Netflix to have 3 friends access it simultaneously without collecting an extra ransom.

But, they ARE getting paid for that access.

“The reality is television can be had fairly easy without paying for it.”

Welcome to… well, both the advent of free to air television before you were born and the reality of the marketplace you’re operating in.

Anonymous Coward says:

Re: Re:

Welcome to… well, both the advent of free to air television before you were born and the reality of the marketplace you’re operating in.

He did have some profitable decades of getting people to pay for things they could’ve gotten for free with a little effort. Now it’s a little less effort. OK, cable-only channels became common in the 1990s, but most popular shows were on free-to-air until a decade ago.

Anonymous Coward says:

Re: Re:

“The reality is television can be had fairly easy without paying for it.”

Yeah, LOL – he says this as if people had to pay for their over the air television all this time. Indirectly, tv viewers have paid for the “service” via purchase (intentional or not) of items that were advertised. But now advertising is not enough for these people and they want more of what the consumers do not have.

As long as consumer net disposable income is low there will not be a huge increase in demand for these types of products and services. Those with tunnel vision will be hurt by their ignorance of the market.

renato (profile) says:

Re: If I pay for 4 concurrent streams...

It is not blocked by the service provider because the backlash destroys more value than its enforcement create.

If you start sub-locating your streams to a third party (I recommend focusing on people from different time-zones to reduce the possible overlap), your account will be blocked pretty soon and they will argue that you violated the terms of service.

Cdaragorn (profile) says:

Re: Re: If I pay for 4 concurrent streams...

Which service provider are you talking about?

None of what you’re claiming is true for Netflix, at least. My family has shared an account and paid for the extra streams to do it and never had even a hint of a whisper from Netflix that we were doing anything wrong. And yes this was across multiple time zones.

renato (profile) says:

Re: Re: Re: If I pay for 4 concurrent streams...

None specifically.
I should have used ‘would’ instead of ‘will’.

Some time ago, Netfilx was cracking down VPN users that used an account from a country to access content from other (or at least posing to do to please the copyright owners), but it seemed to have stop, or people stop reporting about it.

PaulT (profile) says:

Re: Re: Re:2 If I pay for 4 concurrent streams...

Honestly, I think the whole VPN thing is just another indicator of how smart Netflix have been. They turned a blind eye while it was happening, but were forced to start doing something when the major studios started freaking out. The reason was simple – Netflix were now big enough to matter, and the fragmented, illogical way the film markets have been set up meant that they stood to lose money. If a person in the UK was watching a movie in the US, the money might be going to the wrong person because the studios had negotiated a different distributor.

Netflix were actually taking note, however. They knew that people were happy to pay, they were just getting angry that some countries got such a better deal, and annoyed at the regular disappearance of content when it came time to renegotiate. So, they pivoted – experimenting with content they owned outright, and that they could release simultaneously everywhere at once. It’s a winning move thus far. The reason why you don’t hear so much about VPNs is that the content people are increasingly wanting to access is owned by Netflix and not restricted. by location.

That’s the difference here – the studios reacted by trying to stop people accessing content they paid for in the way they wanted, Netflix concentrated on making it easier. It’s not hard to see why they’re winning.

renato (profile) says:

Re: Re: Re:3 If I pay for 4 concurrent streams...

As netflix gets more consolidated on this market its position will also change.
For example, there is already a slight change on its defense of net neutrality since it is not as crucial as it was some years ago, and now it can actually be better for them if it is repelled.

I think it will also extend to account sharing, while it might not be banned, it will become less advantageous to do that.

Pirating, including streaming and torrent, are still not a threat strong enough for them, and they let it live.
But it will not last forever, and they will combat it as strong (but maybe not as stupid) as the traditional media owners.

PaulT (profile) says:

Re: Re: Re:4 If I pay for 4 concurrent streams...

“I think it will also extend to account sharing, while it might not be banned, it will become less advantageous to do that.”

I don’t think so. Ultimately, “account sharing” is just people using logins to access a service that s paid for. It’s not possible to lock that down without killing the service for legitimate uses. In terms of usage, it doesn’t matter if you have 4 friends sharing the same account or a family of 4 who use the account but are regularly elsewhere than their home location. How do you kill one without destroying the usefulness of the service for the others? What benefit is there of doing so, when you realise that blocking those 4 friends from sharing will never result in 4 full subscriptions in the real world?

“Pirating, including streaming and torrent, are still not a threat strong enough for them”

I don’t think they ever will be. For the most part, Netflix are at least as convenient as those options if not more so, and the price aspect has only ever been a small part of the reasons why people pirate. They are not real dangers to Netflix, because they chose a business model that makes piracy less attractive, rather than trying to live off artificial restrictions and other shenanigans.

They will probably make some bad decisions at some point, but Netflix’s service simply does not have the same weaknesses as the legacy models, by design.

renato (profile) says:

Re: Re: Re:5 If I pay for 4 concurrent streams...

In terms of usage, it doesn’t matter if you have 4 friends sharing the same account or a family of 4 who use the account but are regularly elsewhere than their home location.

I completely forgot that people use cellphones to watch movies, and I was basing it only on households.

For the most part, Netflix are at least as convenient as those options if not more so, and the price aspect has only ever been a small part of the reasons why people pirate.

When more services appear and become the only legal streaming source for some products (such as Disney streaming), I’m not sure if people will pirate them (some might sign up several of them, but then it is just good old cable), or just give them up and only access one of those giant silos.
Services like popcorn time are at least as convenient as netflix, and also easier to tweak/customize for different audiences (I’ve never got used to netflix interface on a TV). It is also not restricted by licenses and it is cheaper/free.

Netflix only got bigger because it is convenient, not because it is a legal alternative.
The users would switch back to pirating if it cannot deliver what they want with convenience, for example because of some content being removed due renewing negotiations.

PaulT (profile) says:

Re: Re: Re:6 If I pay for 4 concurrent streams...

“I completely forgot that people use cellphones to watch movies, and I was basing it only on households.”

That’s OK, but that is exactly the kind of issue the legacy industry seems to have. They make certain assumptions, and forget that in the real world people do things that don’t match those assumptions. Then, instead of adapting, they try to force people to behave the way they want them too.

This is another reason why Netflix are winning – they understand their customers. They know that people want to watch during their commute, in a hotel when they’re on business, in another country when travelling, when they don’t have an active internet connection available and so forth. The legacy businesses are set up to try and block this behaviour, Netflix accept the reality and deal with it.

“When more services appear and become the only legal streaming source for some products (such as Disney streaming), I’m not sure if people will pirate them (some might sign up several of them, but then it is just good old cable), or just give them up and only access one of those giant silos”

That is going to be something that will be interesting to watch, but this is why Netflix are concentrating so much on original content. They attracted a lot of customers with their Disney deal, and they are doing their best to make sure people want to stay there. I suspect most people will pay for both as 2-3 services appears to be the sweet spot for the majority from what I’ve seen, but it will be interesting to see how the market is affected.

“Netflix only got bigger because it is convenient, not because it is a legal alternative.”

I disagree there, to an extent. I think that fundamentally most people prefer legal access, and don’t mind paying a reasonable amount for access. But, you are correct in that convenience was a major factor. I remember when first trying to sell people on Netflix (before it was available where I live, so everyone was having to also pay for a VPN), the major selling point was the instant access and guaranteed quality. No more waiting for a torrent to finish and hoping it wasn’t a crappy cam or something, just access to what you actually wanted.

However, you’re also correct in stating that service like Popcorn Time add the convenience factor to piracy, without the catalogue restrictions of Netflix – yet, most people continue to pay for Netflix. Everything on Netflix is available in a.pirated form, but people are used to going there now. We will see if that continues to be true, but I feel that for most people the breadth of original content is enough to keep them there for a while at least.

renato (profile) says:

Someone already said that.

Execs at HBO (at least before the AT&T acquisition), have similarly viewed password sharing in such a fashion, 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 once they actually have disposable income.

This is exactly the same as the cable executives have been saying in the last years, that millennials will move to their own house an subscribe.
I guess that in a few years the same will be said by streaming executives.

James Burkhardt (profile) says:

Re: Someone already said that.

You miss some of the detail, which is the current revenue direction. Netflix and HBO are seeing subscriber growth, and so these claims are to support observed trends, and in support of a currently successful business model. Traditional Broadcasters on the other hand, are seeing subscriber losses, and trying to explain where they hope to see subscribers in the future to justify the policies that are costing them subscribers.

renato (profile) says:

Re: Re: Someone already said that.

I agree with you, but as you said it must be emphasized that it is said "in support of a currently successful business model."

They expect that young people will become full subscribers, but it will only happen if those accounts cannot be shared anymore.
People would share a cable service if it was physically possible.

James Burkhardt (profile) says:

Re: Re: Re: Someone already said that.

While it is possible that they are claiming password sharing is part of their success without anything backing that up, I fell it is unlikely.

That said, you seem to have some failures in understanding. Limited numbers of streams per account mean a limited number of streams available to share. As long as they gain fans, they have the potential for growth. And that discounts the number of people who don’t mind and want to pay to upkeep a service providing low cost, convenient access to content.

I can tell you, anecdotally, it worked in my case. My friends and I shared a collection of streaming services. When I started to make it on my own, I got my own subscriptions to many of those services. Not all, some of them were not to my taste, but sharing those subscriptions gave me a taste for the content and service, and encouraged me to pay for my own subscriptions to support that service.

I think you also miss that they aren’t just passively waiting for the new subscribers. They are actively innovating to maintain their subscribers and draw in new ones. Cable companies are trying to excuse ‘business as usual’ as their model fails. Netflix and HBO are adapting. HBO’s streaming services are case in point. I never would have subscribed to HBO via Comcast. I’ve rejected that offer repeatedly. But I subscribed to standalone HBO in a heartbeat. Netflix is pivoting to original content as outside content becomes a bigger and bigger quagmire with higher and higher costs. Heck, streaming was a pivot in and of itself.

Yes, if they just sat on their laurels and waited for ‘inevitable’ growth, they’d be no better than Traditional cable. If they do so as their business fails, see above.

But you assume a part of the marketing plan is the whole marketing plan, and the whole business model, and I don’t think that is accurate. More is happening.

renato (profile) says:

Re: Re: Re:3 Someone already said that.

n the end, that judgement can’t be made until they are on a severe downswing and continue the mantra. Until then, it is successful.

I completely agree with that, and it will still take sometime to check if they will keep saying that.

That said, you seem to have some failures in understanding. Limited numbers of streams per account mean a limited number of streams available to share. As long as they gain fans, they have the potential for growth.

I’m aware of that, but since I’m not a subscriber I’m do not know exactly about the price difference and how much can be saved.

Netflix is pivoting to original content as outside content becomes a bigger and bigger quagmire with higher and higher costs.

Which is caused not only by content owners greed, but also because they want to start/started their own streaming services, such as Disney and NBC (or other American TV channel, I do not remember exactly which).
When the streaming services become more like exclusive silos of content, the account sharers will not be potential clients anymore, but just people dividing their costs.
Or, if they are not subscribing to several shared accounts, they will probably just pirate it.

PaulT (profile) says:

Re: Re: Re: Someone already said that.

“They expect that young people will become full subscribers, but it will only happen if those accounts cannot be shared anymore”

Not true, plenty of people would rather have their own rather than be tied to their parents’ contracts. Especially when they start to have families of their own or otherwise go past the maximum limits of the shared account. Also, unlike cable, etc., the cost of a new account is relatively trivial anyway if you already have internet, etc, in place.

“People would share a cable service if it was physically possible.”

People have done so, and it is physically possible. That’s why the signals are encrypted, etc. But, not many people because it’s clearly illegal due to the infrastructure involved. There’s a massive difference between siphoning off from a physical cable going to a single location and a contract that you pay for that explicitly lets you stream from devices in multiple locations.

PaulT (profile) says:

Re: Re: Re: Someone already said that.

“They expect that young people will become full subscribers, but it will only happen if those accounts cannot be shared anymore”

Not true, plenty of people would rather have their own rather than be tied to their parents’ contracts. Especially when they start to have families of their own or otherwise go past the maximum limits of the shared account. Also, unlike cable, etc., the cost of a new account is relatively trivial anyway if you already have internet, etc, in place.

Of course, the conversion rate would never be 100%, but if you’re depending on capturing 100% of any potential market you have no idea how the real world works. If they were blocked from sharing, not only would it make the product itself far less useful and valuable (people sharing accounts within their own household would baulk at the idea of having to buy different accounts for when one member is travelling, etc.), but you always have to remember that simply not paying is always an option. Whether that means piracy, falling back on their DVD collection or investing in the latest video game instead of Netflix is down to the individual.

“People would share a cable service if it was physically possible.”

People have done so, and it is physically possible. That’s why the signals are encrypted, etc. But, not many people because it’s clearly illegal due to the infrastructure involved. There’s a massive difference between siphoning off from a physical cable going to a single location and a contract that you pay for that explicitly lets you stream from devices in multiple locations.

Anonymous Coward says:

Re: Re: Re:2 Someone already said that.

Whether that means piracy, falling back on their DVD collection or investing in the latest video game instead of Netflix is down to the individual.

Why is there this blind spot for YouTube, Vimeo et al. when considering alternatives to paid streaming? There are people growing up with those services, and the much more interactive environment they provide.

PaulT (profile) says:

Re: Re: Re:3 Someone already said that.

The point I was trying to get to is that it’s not just a question of free vs paid. A person just going to YouTube when they have to pay for their own Netflix would feed into the freeloader argument. A person choosing to drop $60 on a video game as their alternative entertainment source would not, nor would a person choosing to simply watch what they already paid for.

We all know it’s much more complicated than that, and also true that most people will use a combination of free and paid sources, but these are the people we’re dealing with.

Bamboo Harvester (profile) says:

And the next "business model"....

…will be accessing the camera on smart TV’s to count viewers, then adding per-viewer charges for counts over 2…

I pay for 2 Netflix streams. We’ve got two “kids” in the Service overseas, so those two streams get used in Japan and Germany. If Netflix has a problem with that, I’ll just cancel the service entirely, then they’ll get NO money.

They seem to be the only players who’ve figured that out.

bob says:

maybe he doesn't know what he's doing.

The arguement That streaming companies don’t know what they are doing is laughable. Obviously they are doing something right or their business would fold because of all the lost revenue/customers.

It’s far more telling that the CEO of charter is claiming competitors are bumbling around in the dark when all he has is the same old playbook to pull from instead of innovating.

Agammamon says:

. . . arguing that young users in particular that share their parents password get hooked on a particular product via password sharing, then become full subscribers . . . .

Why isn’t Congress doing something about these damned corporations deliberately addicting our children to their products? This is worse than tobacco – television rots your brain.

Anonymous Coward says:

hold up...

You mean to tell me that Spectrum wants MORE customers?!? What?!? Those Fargin bastages!

Seriously though,I guess the Tom Rutledge’s of the world don’t realize that Netflix is ENTERTAINMENT; it’s even close to being a necessity.

-Corporations only respond to money.
-We (the consumers) give the corporations most of their money.
-There’s only 1 way to get the attention of the politicians that have been purchased by the corporations, and it won’t be fun.

YOU ALREADY KNOW: BOYCOTT OR BEND OVER

What if we all decided not to order any Christmas/Hanukah/Winter Solstice/Kwanzaa gifts online this year, but instead sent emails to our local ISPs, and our local congressmen/women, demanding an end to local ISP monopolies. Just boycotting online purchases this holiday season, and supporting local brick & mortars instead, would definitely get the ball rolling in our favor. We’ve got to up the pressure. We have the money and the power.

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