Variety: Max Will Start Cracking Down on Password-Sharing This Year, Warner Bros. Discovery May Disable Accounts of Violators

Story from Variety:

Warner Bros. Discovery has jumped on the password-sharing crackdown bandwagon, with a top exec saying Max will begin enforcing restrictions on subscribers sharing accounts outside their household starting this year — following the trail blazed by Netflix, which was more recently joined by Disney.

J.B. Perrette, president/CEO of global streaming and games at Warner Bros. Discovery, announced the coming crackdown on Max password sharing this week at the 2024 Morgan Stanley Technology, Media & Telecom conference.

Regarding cracking down on password sharing, Perrette commented that “obviously Netflix has implemented [that] extremely successfully. We’re going to be doing that starting later this year and into ’25, which is another growth opportunity for us.”

Perrette declined to quantify the upside he expects from the move, saying “I’m conscious of not overselling it.” Max is not at the same scale as Netflix, he added, “but we think relative the scale of our business it’s a meaningful opportunity.”

Netflix added 29.5 million net new subscribers in 2023, up from an annual average of 21 million in 2020-22, boosted by its global implementation of “paid sharing,” a program that prompts users who are borrowing someone else’s account to sign up for their own plan or to have primary account holders add them as an “extra member.”

Disney is similarly cracking down on password sharing among Disney+, Hulu and ESPN+ subscribers. On the Mouse House’s earnings call last month, Disney CFO Hugh Johnston said that starting this summer, Disney+ accounts suspected of “improper sharing will be presented with new capabilities to allow their borrowers to start their own subscriptions.” Later in 2024, he said, Disney+ account holders who want to allow access to individuals outside their household will be able to add them to their accounts for an additional fee.

According to Max’s terms of use, most recently updated Feb. 27, Warner Bros. Discovery reserves the right to “modify access or disable features, including for security reasons, to limit the impact of account sharing outside of your household or where we have concluded in our discretion that there has been misuse of your Max Account. If a suspension or termination occurs, you must stop using the Platform.”

Warner Bros. Discovery’s move to monetize Max password-sharing is part of its efforts to boost the financial performance of streaming. In 2022, Warner Bros. Discovery Max’s streaming business sustained a loss of more than $2 billion, and it eked out a $103 million profit for its direct-to-consumer business in 2023. The company is targeting $1 billion in earnings before interest, taxes, depreciation and amortization by 2025, according to Perrette.

“We said, we are moving from a world of subs at all cost, which is kind of the narrative that existed in the old media landscape, to a one of profitable growth as our key North Star,” he said at the Morgan Stanley conference.

The road map to boost Max’s financial trajectory includes launching in Max in 22 European countries that currently have HBO Max this spring, following the cutover to Max in Latin America and the Caribbean in February. Warner Bros. Discovery also plans to launch the Max ad-supported plan in more than 40 markets by end of 2024. In addition, Perrette said, the company will “lean into” Verizon’s Max-Netflix discounted bundle offering and is exploring similar partnerships.