(Image Courtesy: Mizwhiz)

Sharing your Netflix or HBOGO account with those outside of your immediate family is a no-no, but password sharing with friends, co-workers or extended family members is a reality acknowledged by two of the largest video streamers in the business.

HBO’s Richard Plepler is well aware of the password sharing phenomena, but he doesn’t consider it a material issue. In fact, he admitted HBO is in the video addiction business and believes if non-paying viewers get a taste of HBOGO and get hooked on its lineup, they are more likely to become paying subscribers themselves.

While some on Wall Street may consider that lost revenue left on the table, BTIG Research Analyst Rich Greenfield agrees with Plepler.

“Leaving comedy aside, we suspect password sharing is a very real issue for Netflix as an online-only subscription service and is becoming a growing problem for HBO/HBOGO, as personal entertainment devices proliferate and bandwidth improves,” Greenfield writes. “We believe Plepler’s answer from his Buzzfeed Brews interview that the key is to build ‘video addicts’ that love the HBO brand is the right answer and we believe Netflix management shares that view.  Ultimately, we believe easy access across all devices with great content will drive people to pay for your service.”

Neither video service is open to a sharing free-for-all, however. Both Netflix and HBOGO limit customers to two concurrent video streams at a time. Try for a third and an error message appears. Netflix seems willing to monetize this hidden audience and is now testing subscription rates that vary depending on the number of simultaneous streams a customer wants. The tested plans:

• $6.99 a month for one stream (SD only);
• $7.99 a month for two streams in SD or HD (the current plan);
• $9.99 a month for three streams in SD or HD;
• $11.99 a month for four streams in SD or HD.

For Netflix, the increased revenue that can be earned by charging different rates for concurrent streams might prove a win-win proposition because many lurkers may be unwilling to buy their own account.

Cable operators have had less success being nonchalant about password sharing and have limited most streaming of cable channels to within a customer’s home because of restrictive programming contracts. Many cable networks fear password sharing could lead to non-paying customers getting access to their programming for free.

[flv]http://www.phillipdampier.com/video/Buzzfeed Password Sharing 1-2014.flv[/flv]

HBO’s Richard Plepler explains why password sharing is a non-issue for HBOGO. (Video courtesy: Richard Greenfield, BTIG Research) (1:32)