Disney Considers Clampdown on Streaming Service Account Sharing, Following Netflix’s Lead

The Walt Disney Co. is reportedly considering a move to restrict account sharing on its streaming services, drawing inspiration from Netflix’s similar strategy. In a statement made on Wednesday afternoon, CEO Bob Iger revealed the company’s intent to address account sharing among its subscribers, potentially paving the way for tighter controls on shared access to Disney’s streaming platforms.

Iger stated, “We are actively exploring ways to address account sharing and the best options for paying subscribers to share their accounts with friends and family.” He indicated that Disney plans to begin updating its subscriber agreements with “additional terms” related to sharing later in the year. This would be followed by the implementation of strategies to monetize the streaming services, set to take effect in 2024.

Speaking during the company’s third-quarter earnings call, Iger hinted at the necessity of curbing account sharing and its potential impact on Disney’s growth and subscriber base. He acknowledged that password sharing on Disney’s streaming services has been “significant.” However, the exact extent of this sharing’s impact on the platform’s growth remains uncertain.

“We believe there will be some,” Iger noted, “but we’re not speculating.” He emphasized that Disney views addressing account sharing as a genuine priority and sees it as an opportunity to stimulate business growth.

This move follows in the footsteps of Netflix, which previously introduced a policy stating that an account is intended for use by individuals living within the same household. This policy was designed to reduce the prevalence of password sharing, which Netflix identified as a widespread issue. Netflix reported that around 100 million households were engaged in password sharing. To counter this, Netflix required users outside the subscriber’s household to either obtain their own account or become an “extra member” on the existing account.

Netflix’s efforts to curb password sharing have demonstrated some success, with the company reporting around 238.39 million paid memberships worldwide as of July. The strategy contributed to a net addition of 5.89 million new subscribers during the quarter.

Disney’s direct-to-consumer segment, encompassing Disney+, Hulu, and ESPN+ streaming services, generated $5.5 billion in revenue during the third quarter, representing a 9% year-over-year increase. The segment’s operating loss also saw a notable decline of 52%, totaling $512 million. The combined paid subscriber count for the three streaming services reached 219.6 million.

However, Disney+ experienced a decline in total subscribers during the third quarter, settling at 146.1 million. Hulu’s paid subscribers slightly increased to 48.3 million, while ESPN+ saw a marginal decline from 25.3 million to 25.2 million subscribers.

Iger shared Disney’s ambition for its direct-to-consumer business to achieve profitability by the conclusion of fiscal year 2024.

Despite these developments, Disney reported a total revenue of $22.3 billion and net losses of $460 million from continuing operations for the third quarter. In the same period the previous year, Disney had generated $21.5 billion in revenue and achieved a profit of $1.4 billion.