Disney Plus and the Disney bundle which includes Disney Plus, Hulu, and ESPN Plus, remains a popular streaming service offering. Disney+ is now planning to crackdown on passwords to increase profitability and subscribers. Hulu previously began a password crackdown in March.
As Disney continues to work towards profitability for their streaming services they are making a number of different moves including cracking down on password sharing.
During the Disney Second Quarter 2024 earnings call, Disney CEO Bob Iger shared a timeline for cracking down on Disney+ password sharing and shared some reasoning for their upcoming approach which included praise of Netflix's password crackdown success.
Disney Plus Plans Password Sharing Crackdown
Disney CEO Bob Iger shared that Disney Plus will begin to crack down on password sharing on the streaming service beginning next month in “very select markets we are starting to go after people who are sharing passwords improperly” and then “in ernest or across the globe in September”. He said they feel “quite bullish about it”.
It is not currently clear how they will determine “improper” password sharing.
Iger specifically called out that Netflix's success in this area is a key part of the reasoning for the focus on this password sharing crackdown. He shared that he is “Heartened by the results that Netflix has delivered in their initiative” and that he believes that it will be one of the contributions to Disney Plus growth going forward.
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“Netflix is the gold standard when it comes to streaming. We have a great lineup of programming across Disney Plus, ESPN Plus, and Hulu. What we are building is the technology that Netflix has had in place for well over a decade to improve the business from a bottom-line perspective.
Netflix began to crack down on subscribers sharing passwords in the summer of 2023 and saw a direct impact in subscriber growth. After the crackdown, Netflix reported an additional “9 million new subscribers globally” and “revenue of $8.5 billion for the third quarter of 2023—up 8% compared with 2022 and beating expectations due to the sheer number of new members” according to Forbes.
The team at Netflix also released at the time that “The cancel reaction continues to be low, exceeding our expectations, and borrower households converting into full paying memberships are demonstrating healthy retention.” Clearly Disney hopes that Disney Plus subscribers will have the same reaction.
Iger continued to compliment Netflix saying that they are the “gold standard when it comes to streaming” and that Disney lines up “when you look at programming” but has more room to grow in technology improvements such as regulating passwords. “I feel good about this [Disney password sharing crackdown] being necessary and very very productive next step in terms of the double-digit profitability”.
Will Disney License Their Shows to Netflix or Others?
Later in the earnings call an analyst asked whether Disney would consider licensing their content to other streaming services. This was again likely referencing Netflix which has licensed a large amount of HBO content.
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Iger stated that when they first launched Disney Plus they believed that exclusivity would be a key value of the service, but have since found that it is not the most important piece. He said that they have watched as other companies have had success in increasing the traction of their content by licensing to other services.
Iger was saying that other services have benefited by getting the word out about their content by putting it up on Netflix. He said that they don't have big plans in this area but that the option was interesting.
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