Details of Disney+ password-sharing crackdown are similar to Netflix

Disney on Wednesday shed some more light on how it will curb password-sharing on its Disney+ streaming platform — and it sounds similar to what Netflix did.

CFO Hugh Johnston said Disney+ accounts that the company thinks are “improper[ly] sharing will be presented with new capabilities to allow their borrowers to start their own subscriptions” in the summer. 

That will be followed “later this calendar year” by giving account owners the ability to pay an extra charge for people outside their households to stream with their subscription, according to Johnston.

Netflix, a competitor of Disney in the streaming business, gives users the option of signing up for their own membership or being a paid “extra member” on someone else’s account. It implemented that policy last year. 

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Disney has been indicating for a couple of quarters now that measures to limit password-sharing on its platforms were in the pipeline.

Disney Executive Chairman Bob Iger attends the exclusive sneak peek of Peter Jackson’s “The Beatles: Get Back” at El Capitan Theatre in Hollywood, California, on Nov. 18, 2021. (Charley Gallay/Getty Images for Disney / Getty Images)

Prior to Wednesday’s new details about the Disney+ crackdown, the platform had received a new version of its subscriber agreement that includes a section prohibiting account holders from letting non-household members use their subscription. It also said it could look at account activity and usage to determine where there are any violations and limit or end a user’s service in such instances.

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Hulu and ESPN+ also have the same section, which subscribers of the former streaming service received notice of earlier this month.

Disney’s subscriber count across all of its streaming services totaled 224.5 million at the end of December.

“While we are still in the early days and don’t expect notable benefits from these paid-sharing initiatives until the back half of calendar 2024, we want to reach as large an audience as possible with our outstanding content, and we’re looking forward to rolling out this new functionality to improve the overall customer experience and grow our subscriber base,” Johnston said of the Disney+ password-sharing crackdown measures.

A hand holding a remote control points at streaming options on a TV. (iStock / iStock)

It and other strategies by Disney are ultimately meant to bring its overall streaming business to profitability. 

Disney’s finance chief said that the entertainment giant “remain[s] poised to reach profitability in our streaming business by the end of fiscal ‘24 and build on our momentum to deliver significant sustained profit margins in the future.”

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In the first quarter of fiscal 2024, Disney said its streaming businesses generated nearly $6.08 billion in total revenue, posting a 14% increase year-over-year. Meanwhile, its operating loss narrowed from $1.05 billion in the first quarter last year to $216 million for this year’s first quarter.