The House of Mouse is getting a facelift. On Wednesday’s earnings call, Disney CEO Bob Iger told investors the company would begin cracking down on new password sharing.Earnestly“Starting in September. Iger didn’t say whether the company plans to limit password sharing, but that presumably means the company will monitor logins outside subscribers’ homes and require those suspected of sharing accounts to pay a fee. The announcement comes months before the company plans to raise monthly prices for Disney+, Hulu, and ESPN+ (and their respective bundles) in October.
What this means for most people is higher prices and harder decisions. As more and more streaming services enter the fray — and many of them raise their prices or introduce ad-supported tiers — people who like to watch something are left with two or three services they’re willing to pay $10 to $20 a month for. That’s a lot of money, considering Disney has a pretty robust back catalog (Marvel, Pixar, Star Wars) and Hulu has a ton of shows. bear With so many sports available on ESPN+, it’s likely that many subscribers will pay to continue using the service and even more to share their passwords.
“The crackdown on password sharing has worked to the advantage of other streamers,” says Sarah Henschel, a senior analyst at Omdia who closely follows the streaming market. “It’s an effective strategy to increase revenue, but it also significantly increases consumer frustration with streaming.” In other words, subscribers are likely to continue using the service and even pay more to share their account, but ultimately may not stay with the service altogether.
And damn, it worked for Netflix. Late last year, after a few quarters of shaky times, the streaming giant added 9 million new subscribers worldwide while it was rolling out its ad-supported tier and paid sharing programs. It hasn’t seen a significant hit to its subscriber base since. It’s the only test case so far. Max is expected to crack down later this year or early next year, Others haven’t tested the waters yet—But it shows that paying to share a streaming account doesn’t always mean people will run for the hills. Or at least, not yet.
“Netflix’s password crackdown, combined with its advertising layer, has been a huge boost to subscriber growth,” says Wade Faison-Denny, an analyst at streaming industry tracker Parrot Analytics. Netflix’s global subscriber base grew by 11.8 million in the year before the streamer began its crackdown, and it grew by 39.3 million in the following four quarters, according to Parrot. That could lead to similar growth for Disney.
Everything must pass
This isn’t the first time Disney has warned of such a crackdown. Last year, Iger hinted that the company was considering curbing the practice. In February, the company said it planned to launch a paid sharing program, but it only launched a year later. Some marketsJune.
Disney has been working to build its subscriber base and generate revenue from streaming since launching Disney+ in 2019. In the past three months, Disney+ has grown by about 200k new subscribersThat’s a total of 153.8 million. That’s a small number compared to the 270 million-plus subscribers Netflix claims, but it’s still not bad and a significant increase over last year. Meanwhile, Max is still looking for its next 100 million breakthrough.
As part of Wednesday’s earnings call, Disney revealed Last quarter, the integrated streaming offering turned a profit for the first time, generating $47 million in operating income. That’s a sharp increase. Disney’s streaming business lost $512 million in the third quarter last year. The recent gains were largely due to ESPN+.
