Disney CEO Bob Iger told investors on an earnings call on Wednesday that the company will begin “in earnest” cracking down on password sharing starting in September. Iger didn’t say how the company plans to limit password sharing, but that likely means monitoring subscribers’ logins away from home and making anyone suspected of account sharing pay a fee. The announcement comes months before Disney plans to raise monthly prices in October for Disney+, Hulu, ESPN+ and their respective bundles.
For most people, this means higher bills and tough decisions. As more streaming services enter the market, many of which also raise prices or introduce ad-supported plans, people who love watching movies will have to decide which two or three services they’re willing to shell out $10 to $20 a month for. Disney has a pretty strong back catalog, including Marvel, Pixar, and Star Wars, while Hulu also has shows like: bear ESPN+ has so much sports programming that many subscribers will likely pay to keep the service and even more to share their passwords.
“The crackdown on password sharing is working to the advantage of other streamers,” says Sarah Henschel, principal analyst at Omdia, who closely monitors the streaming market. “It’s an effective strategy to increase revenue, but it’s also fueling a lot of consumer dissatisfaction with streaming.” In other words, while subscribers will likely stick around and may even pay extra to share accounts, it may ultimately mean they don’t keep the service altogether.
And it worked for Netflix. Late last year, after a few shaky quarters, Netflix gained 9 million new subscribers worldwide as the streaming giant rolled out both its ad-supported plans and paid sharing programs. It hasn’t seen a significant drop in subscriber numbers since. For now, it’s the only test case. Max seems poised to start cracking down later this year or early next, and other companies are still investigating. But it shows that paying to share a streaming account isn’t necessarily going to drive people away. At least, for now.
“Netflix’s password crackdown, coupled with its advertising layer, has been a big contributor to its subscriber growth,” said Wade Payson Denney, an analyst at streaming industry research firm Parrot Analytics. Netflix added 11.8 million subscribers worldwide in the year before the crackdown and 39.3 million in the four quarters that followed, according to Parrot. Disney could see similar growth.
All Things Must Pass
This isn’t the first time Disney has warned of such a crackdown: Last year, Iger suggested the company was considering restricting the practice. The company announced plans to launch a paid sharing program in February, but only launched it in select markets in June.
Disney has been struggling to grow its subscriber base and turn a profit from streaming since it launched Disney+ in 2019. In the past three months, Disney+ has only added around 200,000 new subscribers, for a total of 153.8 million. That’s tiny compared to Netflix’s claimed 270 million-plus subscribers, but not bad and a big increase from last year. Meanwhile, Max is still trying to surpass 100 million subscribers.
Disney said in its earnings call on Wednesday that its streaming services as a whole turned a profit for the first time last quarter, earning an operating income of $47 million. That’s a sharp turnaround. Disney’s streaming business lost $512 million in the third quarter of last year, with the recent gains being largely thanks to ESPN+.
