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Disney Password-Sharing Crackdown for Disney+, Hulu, ESPN+ Accounts Will Begin in June

  2024-04-19 varietyTodd Spangler48510
Introduction

Some subscribers to Disney‘s streaming services will start seeing some new messaging up this summer: Pay up for anyone o

Disney Password-Sharing Crackdown for Disney+, Hulu, ESPN+ Accounts Will Begin in June

Some subscribers to Disney‘s streaming services will start seeing some new messaging up this summer: Pay up for anyone outside your main household who’s illicitly piggybacking on the services — or face potentially getting disconnected.

According to Disney chief Bob Iger, the Mouse House this June will “be launching our first real foray into password sharing” enforcement. Iger, during an interview Thursday on CNBC, said the initial launch will be “just a few countries in a few markets” (he didn’t identify them) then “will grow significantly with a full rollout in September.”

The initial communications to Disney+, Hulu and ESPN+ customers will prompt password-borrowers to start their own subscriptions, the company has said previously. Later in 2024, account holders who want allow access to individuals outside their household will be able to add them for an additional fee.

Disney, of course, is taking a page from Netflix on the password-sharing front — and Iger hasn’t been shy about coveting Netflix’s streaming prowess. Netflix execs have credited the broad account-sharing initiative, which commenced last year across more than 100 countries,with helping to boost subscriber numbers.

The password-sharing crackdown is part of Disney’s efforts to achieve “double-digit margins” in its streaming business over the long term, Iger said. His comments came a day after Disney prevailed in a proxy fight over activist investors including Trian Partners’ Nelson Peltz, who lost his bid to get a pair of seats on the company’s board. It’s worth noting that part of Trian’s platform was pushing the company to “achieve Netflix-like margins of 15%-20% by 2027.” Iger, though, asserted that the activist investor campaign “absolutely” didn’t pressure Disney to have a “greater sense of urgency” on any strategic plans.

Disney has said it expects the streaming business to hit profitability by the end of its 2024 fiscal year (which ends in September). The company’s direct-to-consumer streaming unit posted an operating loss of $138 million in the year-end 2023 quarter, compared with an operating loss of nearly $1 billion in the year-earlier quarter and a sequential improvement of $300 million.

On Thursday, Iger also called out the official launch of Hulu on Disney+, the integrated service for bundled subs, which is designed to increase engagement (and reduce cancelation rates). “We need the technological tools to lower churn, create more stickiness,” Iger said on CNBC. “It’s things like recommendation engines, getting to know our customers better. We need to reduce the cost of marketing. We need to reduce the cost of customer acquisition to get the margins up, obviously.”

Ahead of the enforcement of password-sharing violators, Disney+, Hulu and ESPN+ earlier this year notifiedU.S. customers of changes to their subscriber terms, which now explicitly forbid users from sharing their log-in details with anyone who doesn’t live in their primary residence.

According to the updated subscriber agreements for Disney+, Hulu and ESPN+, “Unless otherwise permitted by your Service Tier, you may not share your subscription outside of your household.” The term “household” means the collection of devices “associated with your primary personal residence that are used by the individuals who reside therein,” according to the agreements.

“We may, in our sole discretion, analyze the use of your account to determine compliance with this Agreement,” the updated terms say. “If we determine, in our sole discretion, that you have violated this Agreement, we may limit or terminate access to the Service and/or take any other steps as permitted by this Agreement.”

As of the end of 2023, Disney+ had 111.3 million subscribers in its “core” markets (excluding Disney+ Hotstar in India), Hulu had 49.7 million and ESPN+ had 25.2 million. For the last three months of the year,Disney+ lost a net 1.3 million subscribers in its “core” markets(excluding Disney+ Hotstar), attributing the contraction to price hikes it enacted in the quarter. For the quarter that ended in March, Disney has projected adding between 5.5 million and 6 million subscribers to “Disney+ Core.”

(By/Todd Spangler)
 
 
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