Netflix CEO 'Loves' Netflix Password Sharing
from the customers-not-criminals dept
For a few years now, HBO has turned a blind eye to users that decide to share their passwords for HBO Go (the streaming app for existing cable providers) and HBO Now (the standalone streaming app for cord cutters). Last year HBO CEO Richard Plepler said the company keeps a close eye on the company's password sharing stats, but said the sharing isn't a huge phenomenon. Besides, as the CEO argued in an interview a few years back, the act of sharing passwords can be seen as a new form of marketing the brand, and a tool to create a new generation of addicts:"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.Contrast that to legacy cable operators like Charter Communications, which recently declared that the sharing of login credentials was a diabolical menace. According to Charter (who'll soon be paying $79 billion to acquire Time Warner Cable and Bright House Networks), password sharing is a scourge, and HBO is a fool for turning a blind eye to such brazen "theft":
"But to (Charter CEO Tom) 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."Of course automatically seeing everyone as a thief hiding in the shadows is a sort of rite of passage for cable and broadcast executives. And again, contrast Charter's statement to comments made at CES last week by Netflix CEO Reed Hastings, who proclaimed the company "loved" the idea of password sharing:
"We love people sharing Netflix," CEO Reed Hastings said Wednesday at the Consumer Electronics Show here in Las Vegas. "That's a positive thing, not a negative thing."...A lot of the time, he said, household sharing leads to new customers because kids subscribe on their own as they start to earn income.Note that like HBO, Netflix's love of sharing only goes so far; the company's base $10 version restricts your account to two simultaneous streams, which bumps to four should you pay for the company's $12 plan. HBO similarly informs its users that it limits the number of concurrent streams per account for "security reasons." Still, perhaps there's a lesson buried in here somewhere about not automatically treating potential customers like diabolical criminals?
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Filed Under: marketing, password sharing, reed hastings, richard plepler, streaming video
Companies: hbo, netflix
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typo
Here's a typographical error:
"right of passage" -> "rite of passage"
Cheers,
E
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They're a business, I wouldn't expect them to allow unlimited sharing of an infinitely shareable product. There have to be limits - but, unlike a lot of the legacy players, these limits are placed at sensible points that make sense with the current marketplace. They also don't have a history of suing those who bypass those limits and demanding that "something be done" - they just deal with the reality in front of them.
It's like the VPN freakouts. The legacy industry have been panicking, calling paying customers "pirates" because they try to bypass artificial barriers that prevent them from having the same quality product as those in other countries. Netflix have not only never tried blocking VPNs, they've made switching between countries easy - sensible for their many customers who actually travel internationally and would like to continue to use the product they pay for. The fact that some people "abuse" this facility is a sign of how backward the regional licencing model is, not of something that needs to be criminalised.
The result? Netflix have a platform where their original content is going to be easily available in almost every country on the planet. Meanwhile, the studios are going to be spending the next year continuing to whine that people in Europe are watching Avengers Age Of Ultron when they only gave permission for that to people in Canada (as a random example).
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multiple netflix accounts
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It's funny. trying to maintain control is the problem that he does not understand.
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Seems pretty sensible to me. Instead of yelling and screaming, they just say, "OK, guys. That's enough, K?"
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What? Demand increases when you charge money for something?
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If I was on the board at Charter and my CEO showed such a lack of understanding of basic supply and demand, I would fire him before the earnings call was over. Yes, sure, people demand less of things they get for free. That's definitely how it works.
Also, it's funny how much this sounds like hysterics over P2P a few years ago and how that was destroying the industry because college kids now had free internet.
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Actually, phrased that way it's true. People demand less OF things if they're free - that is, they're willing to put up with lower quality, interruptions, etc. far more than they are with stuff they paid for.
But, phrased the way he put it, it's nonsense. nobody's demanding less video streaming if they get it for free.
"Also, it's funny how much this sounds like hysterics over P2P a few years ago"
The sad thing is how much they've been trying to use the same tactics to "fight" without realising how different the target is. They're still using the "people want free stuff" augment against people who are *paying* for Netflix accounts and other content FFS..
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Not just paying, in the case of people who have to go through VPNs to get a decent Netflix selection, they are willing to pay extra. If they would only realize this, and be willing to accept losing some control, there's a significant market that's showing that they are more than willing to pay, and pay well, for content.
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Idiocy
What a moron. He would actually rather those people who can't afford a cable subscription or don't find it worthwhile should get accustomed to living without it. What effect does he think that will have on the market for cable TV in 5 or 10 years? SMH
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Re: Idiocy
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Response to: Anomynuos Crowad on Jan 14th, 2016 @ 7:11am
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A world of thieves...
Since when has such a statement ever been anything but irrational and without any kind of sense?
There are no honest people left in the world anymore, because by not using every single service and product in the world they have become a thieves.
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Some Netflix users have sub-accounts
Sub accounts lets each person have their own viewing history. Their own play list. Their own recommendations.
Why netflix would do away with this baffles me? What would have made more sense would be to have simply changed the pricing structure so that you pay $X for Netflix, and then each sub-account you add costs an additional $Y per month. That way a household with several viewers does pay more, but not many times more for several full blown accounts.
The password sharing seems like a nod nod wink wink to the fact that multiple people within a household want to view Netflix but they can no longer get sub accounts.
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She's sharing it with three friends as well, but only three of us (out of five) use it regularly.
My next door neighbor wants to cut the cord, and one of the first things I'll be doing is setting her up with a Netflix account. Because they give good value for price.
And yeah, that's "rite" of passage. Curse those homophones!
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Re: Some Netflix users have sub-accounts
So it's a way to softly prod people away from sharing accounts, and towards getting their own as soon as it's financially viable for them to do so. I'm sure Netflix would prefer that everyone within a household have their own full account, they just recognize that it's not realistic to try and force people to do so. This is the compromise they came up with between what they want, and what consumers want.
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anytime a company can get a customer willingly excited and on a regular basis paying an extra 20% in pure profits is a astronomical win.
Who knows it could be that the profit margin on a $10 a month program is only $2 bucks.... and now they have a happy customer talking them up and sharing their joy with others... and they get the profit of two customers... win...win....win
(doing the math I could see that the content companies want the lions share of each subscribers monthly but capped so any extra is bonus but then the remaining gets eaten up by billing advertising etc... thus making the extra $2 bucks pure profit
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Talk about misunderstanding
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Re: Re: Some Netflix users have sub-accounts
You see, it adds value to the service and that's the key thing Netflix offers: value, easy access. The content can be found in 'pirate' sites.
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Re: Some Netflix users have sub-accounts
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Re: Re: Idiocy
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Re: typo
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yeah, it works
Pretty sneaky, Netflix.
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Netflix, at least, is trying to pay attention to what the customers want, not what the stockholders want.
I've pretty much quit going to theaters because the subtitling systems in use force your eyes to focus either on the screen or the subtitles but not both at the same time.
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Re: Re: Re: Some Netflix users have sub-accounts
Things probably weren't playing out like that in reality. Children who grew up and moved out didn't have any real incentive to get their own Netflix account unless their parents stopped using Netflix. Netflix could charge or charge more for sub-accounts, but they would be bashed for raising prices, drive away people who "couldn't afford" the price increase, and generally get a round of bad publicity... and they still wouldn't have a strong incentive for people to get their own subscriptions instead of continue to use their parents' subscription. As long as the cost of a sub-account was less than the cost of a main account, the economics would not favor Netflix. It would be easier, and more cost effective for kids or roommates to directly pay their parents or the subscriber for the cost of the sub-account, rather than get their own more expensive main account.
So they removed the sub-account feature. The blow back they got for loss of the feature was likely smaller than it would have been for charging as much for a sub account as for a main account. And they get they get a real incentive for people to gravitate towards getting their own account.
I suppose as you say they could have tried facilitating people upgrading their sub-account to a separate main account. I'm not sure that would have provided the desired results. Netflix wants people using someone else's account to get their own subscription over time. Sure your suggestion would have removed a barrier to them doing so, but it would not give them the same incentive to do so.
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Re: Re: Re: Re: Some Netflix users have sub-accounts;WTF
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Re: Re: typo
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We can only hope the market will fix this and throws him out.
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Exactly, especially since Netflix does exactly that. So much about cognitive dissonance.
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Re: Netflix, at least, is trying to pay attention to what the customers want, not what the stockholders want.
If so, that's unlikely to happen. Not only will it piss off a lot of customers who don't want subtitles, need them in a different language, etc., but Netflix can only play the videos supplied to them by the studios. They're unlikely to supply such a thing because they would supply the same file to every country they licence to, with the provide adding the relevant subtitles later.
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If I understand correctly, Netflix has a deal where basically they are paying what amounts to a flat or capped out rate for content. So when it comes to adding more users or allowing more viewing, their only real costs are the bandwidth to move the product. So sharing an account has very little bottom line cost for them, compared to the potential value of a future sale as the person gets addicted and wants their own.
Even when the move you from $10 to $12 a month, they extra $2 is almost entirely profit.
it's not how you would look at things normally, but it appears to work for them.
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...and?
Does that mean that you agree with the oft-stated premise here that the business models are the problem, not "pirates"? Or, is there something else you're trying to get at with your rambling opinion based on what you guess they're doing rather than any actual research?
"Even when the move you from $10 to $12 a month, they extra $2 is almost entirely profit. "
So, their overheads never increase, and that increase in price is not to ensure the ability to licence more content or better service delivery? It's just pure profit?
Really? I'm sure the citation for that will be forthcoming any moment now...
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For the intellectually honest, if you make the assertion, you provide the evidence. He's made a claim that I find unlikely, all he has to do is point me to the evidence upon which he's basing said claim. That's how an honest discussion works.
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Re: Netflix, at least, is trying to pay attention to what the customers want, not what the stockholders want.
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Re: Re: Re: Re: Some Netflix users have sub-accounts
And, (hey Netflix, pssssssst, are you listening . . .) Netflix could raise their prices! (gasp!)
Yes, they could. Even a 15% increase, and netflix is still a heck of a lot cheaper than cable. And with huge advantages over cable. No ads. No bugs on the screen. No 'walk on' characters covering up part of the content.
And if Netflix ever starts having ads, then . . . we're done. If Netflix needs more revenue, then RAISE YOUR PRICES. Do not go down the advertising road. Or at least offer two options: ads, and a higher priced premium guaranteed ad free experience.
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Re: Re: Some Netflix users have sub-accounts
In fact, if that were their pricing scheme, I bet a lot of people who share an account today would spring for sub accounts.
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You can look at deals make by Netflix with, say, Dreamworks. It works out to a flat fee per year or per movie. The number of subscribers / viewers does not seem to be a driver in the price. Rather, Netflix has sort of made a bet based on what feels they can earn against the movies, and Dreamworks has agreed to an amount that pretty much assures them a decent bottom line (pre-accounting) on every movie.
So if Netflix takes your $10 a month account, and you add a second household account to it for an extra couple of bucks, that upsell is against a very small marginal cost of doing business. Thus, most of the income on that $2 goes into their pockets, and not to others.
It's pretty basic Techdirt stuff.
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Re: Re: Re: Re: Re: Some Netflix users have sub-accounts
That is a route to disgruntled customers. People don't like it when a provider puts stuff they don't like into a service they're used to and then charges them more to take it out. They could offer a lower priced ad-supported subscription though.
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Unless, of course, they decide to do something else with it.
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Citation? Do you know for sure there aren't other clauses? What about deals not done with major studios, how do they differ? What about deals that aren't exclusive? Your "making it simple" only works if it's accurate, which you're yet to convince me of with your "here's what I assume" statements.
"Thus, most of the income on that $2 goes into their pockets, and not to others."
...unless there's other hidden costs, the contracts aren't as simple as you assume they are, or there are other factors that you haven't thought of in your gross simplification. I mean, a certain amount of that has to go to increased bandwidth and server load at the very least, especially if the $2 additional user uses as much as the $10 user is. As with most industry sycophants, you seem to assume that the cost of running a service doesn't have constant overheads to consider outside of licensing fees.
In other words, you pour out your half-assed opinion, based on incomplete or uncited facts and expect everyone else to take it at face value. Figures.
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Re: Re: Re: Re: Re: Re: Re: Some Netflix users have sub-accounts
* aren't there still some ads on Hulu Plus, just fewer?
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Re: Re: Re: Re:
Clearly you are just trolling and being an asshole. Nothing more and nothing less.
" you seem to assume that the cost of running a service doesn't have constant overheads to consider outside of licensing fees."
You can go back and look up marginal costs. It's the very basics of about 80% of the Techdirt view of digital delivery. Once you understand that, we can come back and have a grown up discussion. Until then, I am assuming you are just a troll and I will treat you as such.
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Of course I can, but that's one deal with one studio. That's not your claim. Your claim was somewhat wider, and you should already have some information to hand upon which your basing such claims. Unless you're lying/making crap up, of course.
"Clearly you are just trolling"
Disagreeing with a known liar is not trolling. However, randomly making claims and refusing to provide a single citation do match the description. Guess which one of us is doing such a thing? (hint: not me)
"You can go back and look up marginal costs"
I understand marginal costs. Which is why I'm curious as to why your description doesn't consider them.
But, whine, whine away about me calling you out and continue to make claims without providing a single verifiable fact. Such is your way, I suppose. Just don't expect me not to call you out on your bullshit next time you spout it.
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Why do you not at least pretend to be interested in honest debate and provide the evidence for your claims?
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