You have about a month left to steal “Loki” from your sister’s Disney+ account. And don’t count on Dr. Stephen Strange to roll back time on this one.
As previously announced, the Disney+ password-sharing crackdown will start in June “in very select markets,” Disney CEO Bob Iger reiterated on Tuesday. It’s an unpopular move, sure, but a “necessary and very, very productive” one in the race to catch Netflix, Iger said. Aw, that’s sweet: he still thinks Disney+ has a chance.
Iger, on a Tuesday conference call tied to quarterly earnings, called Netflix “the gold standard when it comes to streaming,” but added that Disney’s content stacks up “really well” vs. Netflix. What doesn’t stack up is the tech stack.
It is a head start on streaming technology that separates Netflix from the pack, Iger said, which is why the industry leader has industry-leading margins. Disney+ will get there, Iger said, and the password-sharing crackdown is “a necessary and very, very productive next step.”
“We’re starting to go after people who are sharing passwords improperly,” he said, hammering the “improperly.” The full global rollout of whatever Disney ends up calling its own paid-sharing program is set for September. A password-sharing crackdown for Hulu, by the way, will come after the Disney+ one, a person with knowledge of the plans tells IndieWire.
“We feel quite bullish about it,” Iger said. “Obviously, we’re heartened by the results that Netflix has delivered in their password-sharing initiative, and (we) believe that it will be one of the contributors to growth… going forward.”
Netflix’s “paid sharing” program has created a huge new revenue stream for the streamer. That’s good, because advertising has not — yet. As a matter of fact, Disney had the head start in terms of both advertising technology and a sales force. Netflix, to this point, has had to rely on Microsoft to get its own TV-commercials business off the ground.
Buoyed by paid sharing, in which a household can buy an “extra member slot” for someone living outside of the home for $7.99 per month, Netflix’s revenue, profit, free cash flow, and stock price (NFLX) have soared. (Alternatively, a former borrower can open their own Netflix account, which will bring in at least $6.99/month or as much as $22.99/month. There are no bad options here — for Netflix.)
We don’t yet know Disney’s terms for its own such program, but it is no coincidence that the July-to-September quarter is the one for which Iger has promised a Disney+ profit. It already came close in January-March.
Disney’s entertainment-streaming business actually did turn a profit in the company’s fiscal second-quarter of 2024. But with losses from sports (we’re looking at you, ESPN+), the overall direct-to-consumer business still ended up $18 million in the hole. On the whole, however, that’s a significant improvement from prior quarters. It seems Disney+ still lost money in fiscal Q2, but Hulu was profitable enough to carry the burden for both. Read more about Disney’s earnings here.
On the same conference call as the password-crackdown talk, Iger provided new details on just how much he’s cutting Marvel’s yearly output. Marvel movies will max out at three per year, and series at two. Let’s see if the “quality” in his “quality over quantity” mandate follows.
Disney+ is not the only service nipping at Netflix’s heels in terms of account containment. Max, the combination of the defunct HBO Max and still-in-existence Discovery+, is working on its own password-sharing program. Disney’s launch will likely beat Warner Bros. Discovery’s by several months.
