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.

Filed Under: cable, competition, hbo, password sharing, streaming, tom rutledge
Companies: charter, hbo


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  1. icon
    PaulT (profile), 5 Nov 2015 @ 3:51am

    "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.

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