In a bid to curb password sharing, Warner Bros. Discovery’s streaming service, Max, is set to implement a crackdown starting later this year, with full enforcement expected by 2025, according to a report on Bloomberg. This move follows similar actions taken by industry giants Netflix and Disney+ to address the widespread issue of users sharing passwords with friends and family.
Warner Bros. Discovery’s decision comes on the heels of a larger-than-expected quarterly earnings loss in February, which prompted a renewed focus on optimizing revenue streams. Despite the financial challenges, the streaming division reported a notable $103 million profit, showcasing the growing significance of streaming services in the company’s portfolio.
Password sharing has emerged as a significant concern for streaming platforms, potentially costing the industry up to $25 billion annually, as reported by Citibank. Netflix, in 2022, revealed that over 100 million households were using accounts paid for by others, prompting the streaming giant to initiate measures to curb password sharing.
The success of Netflix’s crackdown on password sharing is evident in the surge in new sign-ups that followed the implementation of the policy. In the quarter post-implementation, Netflix experienced 5.9 million new users, nearly three times the analysts’ estimates. This underscores the impact that password sharing crackdowns can have on driving subscriptions.
However, the strategy is not without its challenges. Requiring users to have individual passwords may contribute to subscriber churn, as users tend to cancel their streaming plans once they’ve consumed the content that initially attracted them. Industry-wide data indicates a significant increase in subscriber cancellations, reaching 140.5 million in the previous year, marking the largest drop in subscribers over the last five years, according to analytics platform Antenna.
As Warner Bros. Discovery’s Max joins the ranks of streaming services addressing password sharing, the industry navigates the delicate balance between curbing revenue loss and retaining subscribers in an ever-evolving streaming landscape. The coming years will likely witness further innovations and adaptations in subscription models to address this complex challenge.
