Password resets and thumbprints are among the tactics being considered
A coalition that includes Netflix Inc., HBO and cable-industry titans is stepping up efforts to crack down on password sharing, discussing new measures to close a loophole that could be costing companies billions of dollars in lost revenue each year.
Programmers and cable-TV distributors are considering an array of tactics to cut off people who borrow credentials from friends and relatives to access programming without paying for it. The possible measures include requiring customers to change their passwords periodically or texting codes to subscribers’ phones that they would need to enter to keep watching, according to people familiar with the matter.
Some TV executives want to create rules governing which devices can be used to access a cable-TV subscription outside the home. While someone logging in from a phone or tablet would be fine, someone using a Roku device at a second location could be considered a likely freeloader, one person said.
If none of those tactics work, pay-TV subscribers could someday be required to sign into their accounts using their thumbprints.
“I feel like I’m beating my head against the wall,” Tom Rutledge, the chief executive officer of Charter Communications Inc., said during an earnings call last month. “It’s just too easy to get the product without paying for it.”
“If you ask any cohort of young people if they will ever pay for Netflix or video services, the answer is unequivocally no,” said Mike McCormack, an analyst at Guggenheim Securities.
The pay-TV industry is projected to lose $6.6 billion in revenue from password sharing and piracy this year, according to Parks Associates. By 2024, the number could grow to $9 billion, the research firm said.
Two years ago, some of the biggest names in entertainment and technology formed a group called the Alliance for Creativity and Entertainment, which was devoted to reducing online piracy. Last month, the group announced that it’s turning its attention to password sharing. Participants include Netflix, Amazon.com Inc., Walt Disney Co., Viacom Inc., AT&T Inc.’s HBO, Comcast Corp. and Charter.
While industry executives widely agree password sharing is a problem, there’s no consensus on where to draw the line. Programmers and distributors blame each other for being too lenient in how many people can simultaneously stream from one account. DirecTV and Comcast allow five streams. Fox and ESPN generally allow three.
Online TV services also vary in how generous they are about password sharing. Apple TV+, which launched Nov. 1, allows up to six people to stream from one family plan. Two upcoming services — AT&T’s HBO Max and NBCUniversal’s Peacock Curiosity Stream — aren’t ready to announce how many streams to allow, according to representatives for both companies. A spokeswoman for Disney+, which launches Nov. 12, didn’t respond to a request for comment.
Netflix allows just one stream for its basic plan and four streams for its most expensive service. Three years ago, CEO Reed Hastings said password sharing is “something you have to learn to live with, because there’s so much legitimate password sharing — like you sharing with your spouse, with your kids.”