Netflix Starts To Harden Its Stance On Password Sharing

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For years now, streaming video providers like HBO and Netflix have taken a relatively lax approach to password sharing. Netflix CEO Reed Hastings has gone so far as to say he "loves" password sharing, and sees it as little more than free advertising. Execs at HBO have similarly viewed password sharing in such a fashion, saying it doesn't hurt their business. If anything, it results in folks signing up for their own accounts after they get hooked on your product, something you'll often see with kids who leave home, or leave college and college friends behind.

But some recent shifts in the sector suggest that may soon be changing. HBO was bought by AT&T, which tends to have a more...monopolist-esque mindset when it comes to making consumers happy. And as Netflix has grown larger and more powerful, many of its more consumer friendly positions (like oh, supporting a healthy open internet) have fallen by the wayside. And there's a growing coalition--spearheaded by Charter CEO Tom Rutledge--that is intent on portraying a fairly limited password sharing problem as "insane" and "piracy."

Rutledge, whose "get off my lawn" rants on this subject have been going on for years, has spearheaded the rise of the "Alliance for Creativity and Entertainment," an organization Charter, AT&T, and Netflix all belong to. As that coalition has made cracking down on password sharing a core priority, Netflix executive rhetoric on this subject has started to shift, with Co-Founder and former CEO Marc Randolph dropping some strong hints to Yahoo that a password sharing crackdown may be coming:

"Streaming giants and cable companies, led by Netflix (NFLX) and HBO (T), are reportedly considering ways to crack down on password sharing among streaming users. “You’re not scared, are you?” Netflix Co-Founder & First Netflix CEO Marc Randolph told Yahoo Finance’s YFi PM, later adding: “You know there’s abuse and that’s not fair.”

While a lot has been made of said "abuse," it's important to remember that streaming providers already impose limits as to how many hardware devices can stream from one account at any one time. And while folks like Rutledge like to proclaim that password sharing constitutes the loss of millions in revenue, like in piracy debates there's no guarantee that users will automatically sign up for subscriptions should companies start being hard asses on the subject. Not being hard asses like this is the exact reason people, for now, like streaming providers so much more than their counterparts in the traditional TV sector.

That said, Randolph makes it clear he understands the name of the streaming game right now is getting customers to sign up, and any hard-nosed crackdowns--especially if they impose new barriers to access--only annoy users and make that more difficult. As a result, we're apparently only at the "whine more about it to the media" part of the program:

“I don’t think we’re talking about people coming into your apartment and putting you up against the wall and saying: ‘Show us your credentials,’” Randolph said. Randolph explained that from Netflix’s inception, it was meant to be flexible and easily accessible. "There’s abuse and that’s not fair,” he said. “But the whole time you want to make it easy for people to be flexible."

Right now, competition ensures that companies will likely remain flexible on this subject. The name of the game is gobbling up as many new subscribers as possible. But as the also-ran services are shaken off and a few companies come to dominate the space, you can be sure that a tougher crackdown on password sharing is waiting in the wings. Even if it's nowhere near the terrifying menace companies are portraying it to be.