Disney+ to Start Cracking Down on Password Sharing

Disney will launch its "first real foray" into the streaming industry's password-sharing crackdowns, with CEO Bob Iger announcing the company will begin enforcing restrictions on subscribers sharing access to their Disney+ and Hulu accounts this summer. After Iger pledged to achieve both "profitability and growth" in Disney's streaming business, Disney CFO Hugh Johnston said during a Feb. 7 earnings call that Disney+ users would soon be "presented with new capabilities" to allow account borrowers to start their own subscriptions. Disney then updated its user terms to ban account sharing as it launched the combined Disney+/Hulu service in March.

"In June, we'll be launching our first real foray into password-sharing," Iger told CNBC's Squawk on the Street. Iger added that the Hulu and Disney+ password-sharing crackdown will begin with "just a few countries and a few markets, and then it will grow significantly with a full rollout in September." 

Disney reported in its quarterly earnings results in February that Disney+ lost 1.3 million subscribers in the final quarter of 2023 following the most recent price hike in October. As of February, the company has 111.3 million Disney+ Core subscribers (including more than 150 global markets, excluding Disney+ Hotstar) and 49.7 million Hulu subscribers. Disney's move to paid-sharing comes after streaming rival Netflix implemented its Transfer Profile and Extra Member options, effectively monetizing account sharing to drive revenue growth.

Asked if Disney might achieve similar margins to Netflix — in January, the streamer reported it added 13 million members to reach 260 million globally, in part to its shift to paid-sharing — Iger said, "It would be a little premature for me to say yes to that, but it would certainly be great if we could."

"We aim for this business to be a growth business for the company, with margins that our shareholders will feel good about," said Iger, who beat activist investor Nelson Peltz in Disney's shareholder vote. "We know how to run high-margin businesses well — parks and resorts a great example of that — and I'm confident that we're on the right path."

As for Disney emerging as the "clear no. 2" in the streaming industry behind Netflix, Iger told host David Faber, "That would be fine, but I wouldn't say that's necessarily the goal. But Netflix is the gold standard in streaming. They've done a phenomenal job in a lot of different directions. I actually have very, very high regard for what they've accomplished. If we could only accomplish what they've accomplished, that would be great."

"The good news is we know what we have to do — and, look, we start with a very strong hand," Iger continued, referencing Disney's content library from Marvel Studios, Lucasfilm, Disney, and Pixar, and the company's acquisition of 20th Century Fox, with IP like Avatar and The Simpsons. "We have the goods, and now we've got to execute."