The House of Mouse is getting a makeover. On an earnings call Wednesday, Disney CEO Bob Iger told investors that the company will begin a new crackdown on password sharing.oh really” starting in September. Iger did not divulge how the company plans to limit password sharing, but this will presumably mean the company will be on the lookout for logins outside of a subscriber’s home and will require those suspected of sharing their accounts to pay a fee to do so. The announcement comes months before the company intends to raise monthly prices for Disney+, Hulu and ESPN+ — and their respective bundles — in October.
What this means for most people is higher bills and tougher decisions. As more and more streaming services enter the fray, and many of those services also raise prices and/or introduce ad-supported tiers, people who love to watch stuff are increasingly forced to decide which two or three services they are willing to pay $10-$20 a month for. Considering Disney has a pretty solid catalog (Marvel, Pixar, Star Wars), as well as Hulu shows like Bear and tons of sports on ESPN+, many subscribers are likely to shell out money to keep the service and shell out more to share their passwords.
“The crackdown on password sharing has worked well for other streaming services,” says Sarah Henschel, a principal analyst at Omdia who follows the streaming market closely. “It’s a strategy that works well to increase revenue, but it creates a lot of frustration among consumers with streaming.” Put another way, subscribers are likely to stick around and perhaps even pay the extra fees to share their accounts, but that may mean they don’t ultimately keep all the services.
And by golly, it worked for Netflix. Late last year, after a few shaky quarters and amid the streaming giant’s rollout of two ad-supported tiers and a pay-to-share program, Netflix added 9 million new subscribers worldwide. Since then, it hasn’t seen any major dents in subscriber numbers. So far, it’s the only test case: Max seems set to roll out its offensive late this year or early next year, and Others have yet to test the waters.—But it does indicate that paying to share a streaming account doesn’t always send people running. Or at least it hasn’t happened yet.
“Netflix’s password restriction, combined with its level of advertising, has been a huge driver of subscriber growth,” says Wade Payson-Denney, an analyst at Parrot Analytics, a streaming industry researcher. In the year before the streaming service began implementing restrictive measures, Netflix’s global subscriber base grew by 11.8 million; in the four quarters since, that base grew by 39.3 million, according to Parrot. This could lead to similar growth for Disney.
All things must pass
This is not the first time Disney has warned of such an offensive. Last year, Iger hinted that the company was looking into limiting the practice; in February, the company said it planned to start a payment exchange program, but then rolled it out in Some marketsin June.
Disney has been working hard to grow its subscriber base and profit from streaming since it launched Disney+ in 2019. Over the past three months, Disney+ generated only about 200,000 new subscribersfor a total of 153.8 million, a paltry figure compared to the more than 270 million subscribers that Netflix claims to have, but not bad and a marked increase from last year. Meanwhile, Max continues to seek break 100 million.
As part of Wednesday’s earnings announcements, Disney revealed Their combined streaming offerings turned a profit for the first time in their history last quarter, with operating profit of $47 million. That’s a notable turnaround; Disney’s streaming business lost $512 million in the third quarter of last year. The recent gains were largely due to ESPN+.
