Max Joins the Password Sharing Crackdown: A Price Hike in Disguise?
Warner Bros. Discovery’s streaming platform, Max, is gearing up to implement measures to restrict password sharing, following in the footsteps of Netflix and Disney+. This move, long anticipated, was officially unveiled during the company’s third-quarter earnings call, with executives openly acknowledging its primary motivation: generating additional revenue. Unlike other streaming services that have carefully navigated the messaging around password sharing restrictions, Warner Bros. Discovery (WBD) has been surprisingly candid, admitting that the initiative is essentially a price increase disguised as an attempt to prevent account abuse.
The announcement came during the investor earnings call where JB Perrette, President of Global Streaming and Games, first hinted at the impending crackdown. Shortly after, Chief Financial Officer Gunnar Wiedenfels clarified the timeline, stating that WBD plans to initiate "very soft messaging" regarding account restrictions towards the end of 2024. The aim is to progressively limit password sharing throughout 2025 and into 2026, effectively tightening the reins on unauthorized access to the platform.
Wiedenfels did not mince words when describing the rationale behind this strategy. He explicitly stated that ending password sharing is "in effect… a form of a price rise," compelling users who haven’t subscribed or those sharing accounts across multiple households to pay more. This transparency is a departure from the tactics employed by Disney and Netflix, which emphasized combating account abuse as the primary reason for their respective password sharing restrictions. The Warner Bros. Discovery executive even expressed excitement about the plan’s potential to provide a "kicker" to boost revenues, further solidifying the company’s financial motivation.
This move comes on the heels of recent price increases on Max. In June, the ad-free tier saw a $1 increase, bringing the monthly cost to $17, or $170 annually. The Ultimate ad-free tier, which offers simultaneous streaming on more devices and offline downloads, jumped to $21 per month, or $210 per year. These price hikes are part of a broader trend across the streaming landscape, with numerous platforms implementing similar increases throughout 2023 and 2024.
Max’s approach to restricting password sharing is expected to begin with email notifications informing customers of the upcoming changes. While the exact implementation details remain unclear, WBD might adopt a model similar to Disney’s, offering "extra member" accounts for an additional fee, potentially around $7 per month. This would allow subscribers to officially share their accounts with individuals outside their household for a supplementary charge. Netflix currently offers a similar option, charging $8 per month for shared access outside the household on Standard or Premium plans.
Ironically, this crackdown is occurring at a time when Warner Bros. Discovery is boasting about significant subscriber growth. The combined subscriber base of Max and Discovery+ increased from 103.3 million in June to 110.5 million, with the company attributing the surge to the Paris Summer Olympics. However, there is concern that these newly acquired subscribers may not remain loyal once the games conclude, especially in light of the impending password sharing restrictions and potential price increases.
CEO David Zaslav, who recently received a 25% raise to his already substantial salary, expressed the belief that the company’s assets are "undervalued." He emphasized the need to reduce expenses to maximize profits, while simultaneously highlighting Max’s subscriber growth as a driver of increased revenue and profitability. Zaslav also indicated a desire for greater "consistency" in content, particularly after expressing disappointment with the projected returns on "Joker: Folie à Deux."
The candor displayed by Warner Bros. Discovery regarding the true nature of its password sharing crackdown raises concerns about the broader implications of these "vampiric, anti-consumer practices." A recent report by Deloitte revealed that U.S. households are now paying an average of $61 per month for multiple streaming services, a 27% increase from 2023. This surge is attributed to fragmented content offerings and escalating prices. The report was released before the latest round of cost increases from Max and Disney+, suggesting that the financial burden on consumers is only set to intensify.
The growing cost of streaming is prompting many to reconsider their subscriptions and explore alternative entertainment options. The increasing frequency of price hikes, coupled with the implementation of password sharing restrictions, is eroding consumer goodwill and fostering a sense of resentment towards streaming platforms. While these measures may provide short-term revenue gains, they risk alienating subscribers and ultimately undermining the long-term sustainability of the streaming model.
The decision by Warner Bros. Discovery to openly acknowledge the financial motivation behind its password sharing crackdown highlights a growing trend within the streaming industry. As competition intensifies and subscriber growth plateaus, companies are increasingly resorting to tactics that prioritize profit maximization over customer satisfaction. This shift raises fundamental questions about the future of streaming and the relationship between providers and consumers. Will the pursuit of short-term gains ultimately damage the long-term health of the industry? Only time will tell, but one thing is clear: the golden age of streaming, with its affordable prices and unrestricted access, is rapidly fading away. The future appears to be one of higher costs, stricter rules, and a growing sense of unease among consumers who are increasingly feeling squeezed by the very platforms they once embraced.
