Warner Bros Discovery (WBD) will give freeloaders the boot from its streaming service Max over the next few months, but the company’s crackdown on password sharing will take a less-aggressive approach than some of its peers, executives said on Thursday.
On a conference call with investors and reporters, WBD executives said they hope to convert freeloaders into paying subscribers over the next year, with the goal of having a firm barrier to password-sharing on its streaming service Max installed by the end of 2026.
Currently, WBD counts more than 122 million global streaming subscribers, many of whom pay for Max in the U.S. and other countries, though the count includes a smaller segment of streamers who opt for the lifestyle-oriented Discovery Plus instead. WBD also continues to operate an HBO-branded streaming service in some countries where the app has yet to relaunch as Max.
Domestic streaming average revenue per user (ARPU) clocked in at $11.15 during the first quarter (Q1) of the year, with the company citing new wholesale agreements with some pay TV providers and unique bundles like the Max pairing with Disney’s services as affecting its ARPU rate over the past 12 months.
Freeloaders also continue to be a problem, as a significant number of WBD’s streaming customers comfortably share their passwords with those who live beyond their immediate address. Last month, the company began its measured approach to cracking down on the practice by offering Max subscribers who purchase the service directly from WBD the opportunity to add an “extra member” for a separate monthly fee. The scheme is similar to extra member subscription launched by Netflix and Disney over the past year.
J. B. Perrette, the President of Global Streaming at WBD, said on Thursday the move was part of the company’s softer approach to cracking down on password-sharing, one that involves “very soft messaging” to convince customers to pay for an extra member or encourage freeloaders to sign up for their own accounts.
Right now, the company has started its password-sharing crackdown with messaging that targets retail customers in the U.S. — those who pay for Max directly through WBD, not those who receive it through their pay TV operator or as part of a bundle with another service. But the messaging will eventually target other subscribers as well, including those outside the U.S., and will become more firm in the coming months.
“As the password-sharing crackdown comes, we will also add more subscribers,” Perrette said. He later noted that the full strategy will take “12 to 18 months to get full steam,” but will lead to a boost in streaming-related ARPU as existing customers add extra members to their accounts and former freeloaders purchase their own ad-supported or premium subscription to Max.
Subscriptions continue to drive the lion’s share of WBD’s streaming business, with the company earning $2.329 billion in revenue from subscriptions to Max, Discovery Plus and other services. The figure was up 7 percent compared to Q1 2024, and accounted for most of WBD’s $2.566 billiion in streaming-related revenue during the period.
The rest was attributed to advertising, which is quickly becoming a bigger part of WBD’s streaming business. Streaming ad revenue clocked in at $237 million during Q1, up 35 percent on a year-over basis.
