Netflix, Max, Disney+ Password Policing Is Latest Bid for Streaming Viability

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Following in the footsteps of Netflix and Max, Disney+ is the latest streamer to crackdown on account sharing to boost subscriber growth and keep the business viable.

The move is hardly a surprise given the success which archrival Netflix has had since initiating its crackdown a year ago. According to analytics firm Antenna, Netflix's United States signups increased by 102 percent during the first four days after its rule went into effect in May 2023, compared to the 60 days prior. There were an average of 73,000 new signups daily, far outpacing cancelations.  

From June, Disney will begin converting suspected account sharers to paid subscribers across Disney+, having already begun announcing the changes to Hulu and ESPN+ subscribers.

"Paid sharing is an opportunity for us,” said Disney CFO Hugh Johnston during the recent Q3 earnings call. “It's one that our competitor is obviously taking advantage of, and one that sits in front of us."

Say goodbye to your best friend's neighbor's great aunt's Disney+ account, as Disney CEO Bob Iger said in an interview with CNBC.  

“We certainly have established this as a real priority,” Iger said the earnings call. “We actually think that there’s an opportunity here to help us grow our business.”

From the summer, Disney+ accounts suspected of improper sharing “will be presented with new capabilities to allow their borrowers to start their own subscriptions,” explained Johnston. This will include allow account holders to share to access to their account with individuals outside their household for an additional fee.

“While we’re still in the early days, and don’t expect notable benefits from these paid-sharing initiatives until the back half of calendar 2024,” Johnston added. “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.”

Netflix also has an option for the account holder to pay to add a member outside the home or for the borrower to transfer their profile and create their own account.

It saw Q4 revenue up 12 percent year-over-year, which it credited to paid sharing, as well as price increases and the underlying business. Netflix said it is now the company’s “normal course of business.”

“It’s integrated in everything we do, and we’re iterating and improving on it just like we would any other significant part of our product experience,” Co-CEO Greg Peters said on the streamer’s Q4 earnings call. “We think of this essentially as having built a more effective engine for translating the entertainment value that we’re creating for our members into revenue. But I think it’s critical to understand that that engine works on top of — and we see it working on top of — very healthy organic growth.”

In March, Warner Bros. Discovery, Max’s parent company, said it would bring in account sharing restrictions by the end of this year with a broader rollout in 2025.

“We think, relative to the scale of our business, it’s a meaningful opportunity,” JB Perrette, WBD’s CEO and president of global streaming and games said.

Amazon and Apple have yet to follow suit — “though neither streaming nor entertainment is the main focus of these companies and they don’t need to use streaming to balance out cord-cutting losses,” noted The Hollywood Reporter.

As Netflix did, Disney will test the enforcement in smaller territories outside the U.S first. Iger hopes the move will be one more turn of the screw to transform the service into a more profitable venture.

Password-sharing crackdowns also come at a time when piracy is on the rise—something that’s keenly impacted WBD’s offerings. For years, HBO’s Game of Thrones was one of the most pirated shows on TV. More recently, The Last of Us have taken the top spots.

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