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Why TV Networks Don’t Equate Password Sharing With “Stealing Cable”

homerstealscableI’m going to let you in on a little secret of mine — something I probably shouldn’t reveal here, except that I don’t expect any major repercussions from telling the world about this.

Despite cutting the cord more than a year ago, I still have access to WatchESPN on my Roku. I can also watch Fox Sports Go, NBC Sports Live Extra, and most other TV Everywhere services that require authentication.

How do I still have access to these services? Friends and family are letting me use their passwords to log on to these sites and watch. I am far from alone in this regard. Plenty of cord cutters are turning to friends to get access to a variety of TV Everywhere services. Some cable companies even allow users to create separate passwords for friends and family so that they can still watch TV on their laptops, tablets, and phones.

You will notice, however, that neither cable companies nor networks are referring to this practice as “stealing cable”.

In the past, cable companies fought tooth and nail to prevent anyone from plugging a third-party decoder box into that cable outlet on the wall and picking up HBO without paying for it. Now, however, even HBO CEO Richard Pepler says that he doesn’t care if you’re sharing that HBO Go password with your friends. He came right out and said it had “no impact on the business” and that it was actually a “terrific marketing vehicle for the next generation of viewers”.

You will also notice that just nine months after Pepler made that declaration, HBO announced that it was planning an online-only version of its service sometime in 2015.

This gets to the heart of why HBO — and why many other networks — are okay with password-sharing: they can see who’s watching.

Networks can track data on TV Everywhere services in ways that simply aren’t possible with legacy ratings services like Nielsen. They can see how many people are watching certain programs, where they’re watching from, and what cable services they’re using for authentication. That allows the networks to collect incredibly valuable data on viewers. As Colin Dixon wrote in this piece about big data in TV:

With the move online, both companies will be able to build up a detailed profile of the likes and dislikes of each viewer. Aggregated together, this data will allow them to see accurately which shows resonate with a particular audience demographic. Further, they will even be able to tell which scenes, actors and story lines work and which don’t.

Netflix, of course, has been using this type of data for years in order to offer its subscribers a more customized product, and it’s been wildly successful with it. Big media companies are catching on. As Derek Thompson revealed in this must-read piece for The Atlantic, the music and radio industries have been collecting huge amounts of data on music listening patterns from a variety of sources to figure out what songs work and what will keep people from changing stations.

The TV business is catching on, too. Networks want to know how many people are out there using someone else’s passwords. They want to see what people are watching, when they’re watching, and what devices they’re using to watch. That data offers them insights on potential customers that they had once lacked, and they can figure out how to market to that audience accordingly.

ESPN, for example, knows how many people are using WatchESPN to watch specific games, including the record 1.7 million people who watched the USA v. Germany World Cup match last June. Chances are good that they also know how many of those 1.7 million people were borrowing someone else’s password. This might be one reason why Disney, ESPN’s parent company, struck that online TV deal with Dish Network last March, or why ESPN suggested it could offer separate streaming packages as part its new contracts with the NBA and MLS. Like HBO, Disney sees an opportunity to turn password sharers into paying customers by offering them a service they’re willing to buy, while at the same time using those services to track what people are watching and offering them a much more customized experience.

These moves could also reduce the ability of cable companies to set prices on networks, though that could prove to be a double-edged sword for many customers. A la carte cable was never going to be cheaper than the bundle. On the other hand, customers frustrated with their cable companies might just be happier knowing their money was only going toward the channels they actually watched, rather than paying for channels they would either ignore or prefer to avoid.

If that’s the case, ESPN should be as unconcerned with password-sharing as HBO is. WatchESPN can provide the network with all the data they need to figure out how get the most money out of its best customers — and in the long term, that really ought to be ESPN’s goal. The idea that sports fans should be the only ones paying for televised sports shouldn’t seem so far-fetched.

 

9 Responses to Why TV Networks Don’t Equate Password Sharing With “Stealing Cable”

  1. Why do you think it is that sports fans, who benefit the most from the current system, are the ones most vocal about changing it, besides simply knowing more about it? “Charge me more for my sports, please!”

    • I’m not entirely sure that’s true, to be honest, but if it were, I think it would be because those fans don’t necessarily feel like funding those other 186 channels anymore — which is the reason I cut the cord in the first place.

  2. FYI… You can’t identify who’s using an acct, just how many devices are connected at the same time under an acct which is limited. Good future theory though.

    • But as Kurt mentions below, you can get location data from those accounts. So if someone in Texas is letting a relative in Florida use an account, the networks might not know who those people are, but they know where they are. Plus, they know how many people overall are using logins.

      This is why HBO is downplaying password-sharing. They WANT that information, because it tells them how big a market there is for an online-only service — and that market MUST be pretty big, else they wouldn’t have made that announcement.

      Interesting side note, though — Cable TV currently accounts for 86% of Time Warner’s profits. (Source: http://www.hollywoodreporter.com/news/cable-tv-contributes-more-60-668240) So the big question is this: How much of that is HBO, and how much of it is Turning Broadcasting? I would think if Turner was driving those profits, HBO wouldn’t be talking about going OTT.


     

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