Max Password Sharing Crackdown Is Coming, Warner Bros. Discovery Says
Warner Bros. Discovery’s Max will join competitors Netflix and Disney+ in cracking down on password sharing.
JB Perrette, WBD’s CEO and president of global streaming and games, said the initiative would launch later this year with a broader rollout in 2025.
“We think, relative to the scale of our business, it’s a meaningful opportunity,” Perrette said during Morgan Stanley’s 2024 Technology, Media & Telecom Conference in San Francisco on Monday.
The push to crack down on password sharing comes as Warner Bros. Discovery narrowed its streaming loss to $55 million during its fourth quarter of 2023, down from a loss of $217 million a year ago. For the full year, it swung to a profit of $103 million, compared to a loss of $1.59 billion in 2022.
Looking ahead, WBD said its DTC business would have “modestly negative” EBITDA in the first half of 2024 before turning profitable in the second half. WBD is targeting $1 billion of direct-to-consumer EBITDA in 2025.
In its fourth quarter, Warner Bros. Discovery added 1.8 million subscribers in its direct-to-consumer division for a total of 97.7 million. The DTC segment’s results include Max, Discovery+ and traditional HBO cable subscriptions.
Elsewhere, Netflix’s paid sharing initiative rolled out in the United States during the second quarter of 2023, following initial testing in Canada, New Zealand, Spain and Portugal.
In its quarterly shareholder letter in January, Netflix said it is now the company’s “normal course of business” and will allow it to grow and more effectively penetrate an addressable market of about 500 million connected TV households (excluding China and Russia). The streamer expects that addressable market to increase over time as broadband penetration rises.
“It’s integrated in everything we do, and we’re iterating and improving on it just like we would any other significant part of our product experience,” Netflix co-CEO Greg Peters told analysts on the streamer’s fourth quarter earnings call. “So, we think of this essentially as having built a more effective engine for translating the entertainment value that we’re creating for our members into revenue. But I think it’s critical to understand that that engine works on top of — and we see it working on top of — very healthy organic growth.”
Meanwhile, Disney chief financial officer Hugh Johnston said that Disney+ accounts suspected of password sharing would be presented with new capabilities that would allow borrowers to create their own subscriptions beginning this summer.
“Later this calendar year, account holders who want to allow access to individuals from outside their household will be able to add them to their accounts for an additional fee,” Johnston said. “While we are still in the early days and don’t expect notable benefits from these paid sharing initiatives until the back half of calendar 2024, we want to reach as large an audience as possible with our outstanding content. And we’re looking forward to rolling out this new functionality to improve the overall customer experience and grow our subscriber base.”
The password sharing crackdown will also impact Hulu and ESPN+ subscribers, according to an update to its subscriber agreement.
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