Disney+ is the latest streaming service to tackle the issue of password sharing among subscribers. In the Q3 2023 earnings call, CEO Bob Iger acknowledged the widespread problem and stated that Disney is actively exploring ways to address it. The company plans to implement new policies in 2024 to prevent unauthorized sharing of accounts and increase its revenue. This move follows Netflix’s success in cracking down on password sharing, which resulted in a significant increase in subscribers. While Disney’s efforts are commendable, it remains to be seen whether these new measures will be effective.
Iger emphasized that a “significant” number of people have been sharing passwords with friends and family. While this may have allowed more individuals to enjoy Disney+ content, it poses a challenge for the company’s growth. Disney wants to convert these password-sharing users into paying subscribers to boost its revenue. By curbing password sharing, Disney expects to see an increase in new subscribers and a positive impact on its bottom line.
Netflix’s Success Story
Netflix was the first major streaming service to take action against password sharing. By logging out secondary users from the app, Netflix prompted nearly 6 million new subscribers to join the platform. Disney hopes to achieve similar results through its own crackdown on password sharing. However, it is essential to note that each streaming service has its unique user base and content offerings. The success that Netflix achieved may not be replicated by Disney+.
The Challenges Ahead for Disney+
While Iger expressed optimism about the upcoming changes, he also acknowledged that the process may not be completed within the 2024 calendar year. The Disney team will need to experiment and explore various options to ensure a smooth transition for paying subscribers who share their accounts. Updating subscriber agreements with new terms is a priority for Disney, and this process will begin later this year. The company aims to strike a balance between preventing password sharing and maintaining the trust and convenience of its subscribers.
The Indian Market and Disney+ Hotstar
Disney’s decision to address password sharing is particularly crucial for Disney+ Hotstar, its brand in India and other South Asian countries. During the second quarter of 2023, Disney+ Hotstar lost a significant number of subscribers—12.5 million—from April to June. This decline can be attributed to the loss of streaming rights for the Indian Premier League (IPL) cricket tournament, which Disney+ Hotstar previously offered. Furthermore, the removal of all HBO content from Disney+ Hotstar in March further eroded its appeal. These factors have led many subscribers to question the value of their subscriptions.
Understanding Financial Disparity
While the decline in subscriber count appears concerning, it is essential to consider the financial disparity between Disney+ and Disney+ Hotstar subscriptions. Disney+ Hotstar subscriptions are significantly cheaper compared to their international counterparts. For instance, the average revenue per user for Disney+ is $6.58 per month, while Hotstar only brings in $0.59 per month. In total, Disney+ has 105.7 million subscribers worldwide when combined with Hotstar, ESPN+, and Hulu. In comparison, Netflix boasts 238.39 million subscribers, even after its successful crackdown on password sharing. These figures highlight the significant difference in scale and revenue between the two streaming giants.
The Future of Disney+
Disney’s decision to address password sharing is a critical step towards increasing its revenue and securing the loyalty of its subscribers. While it may not yield immediate results, Disney is committed to finding the right balance between preventing unauthorized access and maintaining a seamless user experience. The success of Netflix’s crackdown on password sharing serves as an inspiration for Disney, but it is crucial to recognize the unique challenges and characteristics of each streaming service. Only time will tell if Disney’s efforts will pay off and if it will be able to compete effectively in an ever-expanding streaming landscape.
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