The Hollywood Reporter - 06.11.2019

Behind the Headlines

The Report

THE HOLLYWOOD REPORTER 22 NOVEMBER 6, 2019

LION

: COURTESY OF DISNEY.

HOBBS

: COURTESY OF UNIVERSAL PICTURES.

CAMINO

: BEN ROTHSTEIN/NETFLIX. BOARD: ADOBE STOCK.

H

ow will consumers afford Netflix,

Hulu, Amazon Prime, Apple TV+,

Disney+, HBO Max, Peacock and

on and on? To many industry analysts, the

answer is simple: They won’t. Consumers will

be selective in deciding which digital services

are worthy of their money. Hence, the so-

called “streaming wars.”

But there’s another way

to look at the issue. Thanks

to rampant free-riding,

one account doesn’t mean

one viewer. Passwords will

be shared, and platforms

will be hacked. Under this

framework, the stream-

ers aren’t battling with one

another. They’re teaming up

against the grifters to fight

Piracy 2.0.

On Oct. 30, just a day after

WarnerMedia’s John Stankey previewed

HBO Max at a glitzy event, the Alliance for

Creativity and Entertainment announced

a working group to reduce unauthorized

access to content, specifically mentioning

“improper password sharing” as a top con-

cern. ACE is basically an antipiracy spinoff of

the MPAA. Like the industry lobbying group,

it includes big studios (Warner Bros., Disney,

Netflix, Sony, Paramount) and smaller ones

(AMC, Lionsgate, MGM), along with Amazon.

Perhaps most notably, as of October, ACE now

includes ISPs Comcast and Charter, in yet

a further sign of realignment and shifting

priorities in the piracy wars.

“We are very pleased that ACE and its coali-

tion of members have committed through this

initiative to take on unauthorized password

sharing and other content security practices,”

says Charter CEO Tom Rutledge.

For much of this century, the content indus-

try’s antipiracy focus has been on file-sharing.

First it was Napster and its progeny, then ISPs

willfully blinding themselves to copyright

infringement. Shorthanded as Hollywood

versus Silicon Valley, the digital disrupters

pushed for compelling new services — old

content business models be

damned. Then came mergers

like Comcast-NBCUniversal

and AT&T-Time Warner,

plus organic hybrids like

Netflix. Now, streaming hubs

are growing while fears of

illegal downloads fade. This

evolution is sparking a shift

in thinking.

Take password shar-

ing. Five years ago, HBO’s

then-CEO Richard Plepler

said it had “no impact on the

business” and is, in many ways, a “terrific

marketing vehicle for the next generation of

viewers.” Three years ago, Netflix CEO Reed

Hastings commented, “Password sharing is

something you have to learn to live with.”

Upon its launch in 2017, ACE brought a wave

of lawsuits against services like TickBox and

Dragon Media, which sold devices preloaded

with customized open-source software that

enabled viewing of pirated content. (“Get

rid of your Premium Channels,” is how

Dragon advertised its product. “Stop paying

for Netflix and Hulu.”) Now it appears the

industry is set to go even further by address-

ing free riders. The economics of streaming

nearly demand it. Platforms are spending

billions of dollars annually on both original

content and rights to old shows. To become

profitable, media companies will need to

grow paid subscribers rapidly. AT&T boldly

predicted 50 million subs for HBO Max by

2024. As part of that push, it makes sense to
      target the more than one-fifth of young adults
      who, according to a Reuters/Ipsos poll, say
      they borrow passwords from people who do
      not live with them.
      For now, insiders caution that there are no
      plans to make moves against individuals who
      share passwords with family and friends.
      Instead, ACE will work on “best practices,”
      like, say, technological measures limiting the
      number of devices that can simultaneously
      stream via a single account.
      That said, there are sure to be uncomfort-
      able discussions ahead. If sharing a password
      with a friend is not actionable, what about a
      college dorm sharing a Disney+ account to
      watch Star Wars? And as pirates evade limita-
      tions on streaming accounts, what will be
      the legal response? The industry may press
      claims in court like violation of the Digital
      Millennium Copyright Act’s anti-circumven-
      tion provision or the Computer Fraud and
      Abuse Act, but as of now, there’s a shortage
      of legal precedent on how those claims apply
      to unauthorized use of streaming platforms.
      No wonder then that on Oct. 31 in a court case
      that challenges the DMCA’s anti-hacking rules
      on First Amendment grounds (Green v. U.S.
      Department of Justice), industry groups filed
      a brief stressing how there “would not be a
      viable business model” for subscription-based
      content platforms “without legal protection
      for access controls.”
      The streamers are aware that even the scent
      of the criminalization of password-sharing
      has in the past caused a freak-out among
      consumers. For that reason, most are being
      extra careful about what they say publicly on
      this topic. When asked by THR, neither Netflix
      nor HBO would comment on whether their
      positions on password sharing have evolved.
      But it looks like ACE might be doing the talk-
      ing for them.

Controlling user access to platforms (e.g., password sharing) will be a priority

as major conglomerates bet on new direct-to-consumer services

BY ERIQ GARDNER

Piracy Crackdown May Be

Next Front in Streaming Wars

Sharing by Platform

Top Pirated

Films Now

More Netflix users give login

info to non-family members

Netflix’s Breaking

Bad movie joins

summer box office

hits from Disney

and Universal

Source: HarrisX, MoffettNathanson estimates, analysis (July 15, 2019)

NETFLIX 14%

HULU 11%

AMAZON 6%

Source: TorrentFreak (week of Oct. 21) The Lion King (Disney) Hobbs & Shaw (Universal) El Camino (Netflix)

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