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Summary:

Are you using someone else’s HBO GO password to watch True Blood? Don’t worry, you’re not keeping HBO CEO Richard Plepler awake at night. Instead, he thinks of it as marketing.

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HBO CEO Richard Plepler knows that tons of people share accounts for the network’s HBO GO service — but he doesn’t think it’s a big threat. “It’s not that we are unmindful of it, but it has no real effect on the business,” Plepler said during a recent BuzzFeed event in New York.

He went even further, claiming that password sharing could have a positive effect on HBO’s bottom line down the road. Students who share their parents’ accounts are more likely to one day subscribe to HBO themselves, Plepler argued: “To us, it’s in many ways a terrific marketing vehicle for the next generation of viewers.”

Plepler acknowledged that the network isn’t taking an entirely hands-off approach to shared accounts, and instead is working in “different ways to affect password sharing.” He didn’t go into details, but HBO Go does limit the number of streams that can be accessed at the same time to three, and users have to periodically re-activate their devices.

There’s another aspect to this that Plepler didn’t mention: HBO could theoretically punish people for sharing their account passwords, but it can’t easily target those use others’ passwords in order to sell them their own accounts. That’s because HBO is only available as part of a pay TV bundle, and doesn’t make HBO Go available as a stand-alone offering. In other words: The network doesn’t have any direct commercial relationship with its viewers, as it leaves selling its services to operators. So by punishing password sharers, HBO is more likely to lose existing customers than to win new ones.

That’s a bit different from Netflix, another company that frequently encounters password sharing. Netflix has traditionally also had a hands-off approach towards that issue, but the company recently introduced a slightly more expensive family plan that allows users to stream to up to four device at once, as opposed to the two-stream cap usually in place for the service.

There hasn’t been any indication that Netflix has been cracking down on password sharing in conjunction with the new offer, but people who have attempted to stream to more than two devices simultaneously have reported that they were redirected to an offer to subscribe to the family tier.

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  1. I think that paying based on the number of streams makes the most sense. Most people have Netflix on a lot of devices and it would be silly to require them to think, “Should I install it on my new tablet or leave it on my phone?” People can easily understand a limit on how many people are using a service at one time and can plan accordingly.

    Does anyone else think HBO is making a huge mistake? Or rather, continues to make a huge mistake in slow motion? I’m talking about the decision not to offer a streaming-only service and promote it heavily. Reed Hastings, the CEO of Netflix, faced a similar type of decision when it came to DVDs and streaming. While the way it was handled was a complete PR disaster, that doesn’t change the fact that putting all of its money and profits behind the streaming offering was the exact right move to make. Hastings didn’t look at the quarterly report and go, “DVDs provide a lot of our profits, so let’s just keep doing what we’re doing.”

    I remember a video from last year where an HBO executive was interviewed. He claimed that HBO was accessed 70% linear, 23% On Demand (through a cable box), and 7% streaming. That, along with their surveys showing that most people who wanted HBO were also willing to pay for cable, was seen by him as justification for not offering the streaming-only option. I think that is simply ludicrous.

    If anything, it shows what a terrible job HBO is doing. Netflix has over 30 million streaming customers in the US, more than HBO. Every single one of those subscribers only accesses Netflix through their app (or website, but you know what I mean). Apps, either on a Roku, a tablet, or a TV, are the future of television. HBO might have some fine apps, but if they have only converted a small portion of their user base they are losing. When people turn on their TVs, one of the first places they should look is in their HBO app for content, rather than flipping through channels. Clearly that is not happening. I’m not saying that HBO should kill it’s linear and On Demand offerings. Just that they should be doing everything they can to convert paying customers over to their walled garden instead of the cable company’s box. When people think of HBO, they should think of an app, not a channel.

    Look at the WWE! It’s a perfect example of what all “channels” are going to look like in a few years. How can HBO stand by and watch Netflix add millions of subscribers every quarter and think, “We’re doing a good job.” The differences in profit between HBO and Netflix are due to HBO owning most of its content instead of renting it, and the fact that HBO has a giant lead in international subscribers. That’s it. It has nothing to do with it’s current business model being superior.

    I guess what I’m saying is that HBO is doing fine AS IT IS. But it’s passing up a huge amount of future growth and profit by not imitating Netflix in both customer and content acquisition. HBO should have shared the spotlight at CES advertising 4K. The Microsoft commercials should have HBO prominently displayed next to Netflix on the tablet screen. Everyone and their brother makes sure Netflix is the first thing you can access on their device, and Netflix receives huge amounts of free publicity because of it. I just don’t understand how HBO can ignore that. It’s the difference between having a forward-looking CEO that can bring a company to a whole new level and one who only understands quarterly profits.

    End of rant.

    1. WhatYouPayForSports Sam Saturday, January 18, 2014

      Once more, with feeling: HBO is owned by Time Warner. Time Warner also owns Turner Broadcasting, which runs TBS, TNT, CNN, Cartoon Network, and about six other cable channels. If HBO decouples from cable and takes X% of its audience with them, all those Turner channels lose X% of their audience. Time Warner is not going to rob Peter to pay Paul.

      This is a media consolidation issue. Richard Plepler might be ready to offer a stand-alone HBO Go service and challenge Netflix head-on, but he’s probably aware that someone above him will simply not allow that to happen.

  2. While I think it’s politically useful for HBO to appear relaxed about all of this, the fact remains that this isn’t the world that the pirates like to imagine. They like to rationalize their piracy by claiming that, see, it’s true, it really is good publicity. But all free copies need to come to an end. Publicity is only good for a business if it creates paying customers. At some point, HBO will need to crack down. If freeloading becomes common, the company will go under.

  3. I remember when HBO was stand alone option competing with ON tv(30 years ago)? I only want HBO GO no COX cable. Can’t HBO please get away from the satellite and cable companies who are monopolizing regional markets? All I want is Game of Thrones.
    I dropped my cable service to go with netflix and hulu – so much cheaper.

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