Max Password-Sharing Crackdown Coming This Year

Warner Bros. Discovery streaming and gaming boss J.B. Perrette has confirmed that a password-sharing crackdown is coming to Max this year. Speaking during a Morgan Stanley event, Perrette said cracking down on users sharing passwords will be a way for the company to make more money from the streaming service.

"Obviously, Netflix has implemented [a password-sharing crackdown] extremely successfully," he said. "We're going to be doing that starting later this year and into 2025. Another growth opportunity for us."

Pressed to say just how much more money Warner Bros. Discovery is expecting to make from cracking down on password-sharing, Perrette said it's a "meaningful opportunity."

Netflix's password-sharing crackdown led to a huge surge in subscribers as people got booted off and signed up for their own account. Warner Bros. Discovery is no doubt hoping something similar could happen with Max.

Perrette also cautioned that Max's own password-sharing crackdown might not be as meaningful as Netflix's simply because Netflix is a substantially larger business. For example, Netflix had 100 million accounts that were sharing passwords, while Max--which is a far newer subscription service--doesn't even have that many subscribers total.

Perrette brought up password-sharing in the backdrop of explaining how he aims to make Max a more profitable product in the future. Cracking down on password-sharing is one vector. Another is the globalization of Max. He pointed out how Max was only in one market--the US--until just last week when it came to 39 markets in Latin America. The executive said Max is currently in less than 50% of the addressable market that its peers, like Netflix, are currently operating in. He said Max still has "half the world" to go in terms of expansion, including major markets in Europe and Asia.

Perrette went on to say that Max's revenue split is currently around 80% from the US and 20% from international markets. He said for the leaders in the space, like Netflix, this is inverted, with most of the money coming from international markets compared to the US.

Another area where Max can improve is by launching more content that encourages people to sign up, he said. Perrette said when HBO Max became Max in May 2023, the company had the "lightest content slate we've ever had" in terms of new content.

But in the next 12, 18, and 24 months, Perrette said the company is delivering new installments in its most popular brands, including House of the Dragon Season 2 (June 2024), The Last of Us Season 2 (2025), Euphoria Season 3, and The White Lotus Season 3, as well as the upcoming Penguin and Dune series. There is also the new It TV show, Welcome to Derry, as well as the upcoming Dune and The Conjuring TV shows.

Finally, Perrette said Warner Bros. Discovery has shifted its business ambitions for Max from "subs at all cost" to making the product actually profitable for the company. Another way Warner Bros. Discovery aims to make more money from Max is having more ads on the platform while balancing this to ensure a good user experience, Perrette said.