Disney to go after password sharing ‘in earnest,’ CEO warns

(NEXSTAR) — Still sharing a Disney+ or Hulu login with someone else? That may be short-lived, as Disney plans to crack down on password sharing “in earnest” next month.

This isn’t exactly a surprise move by Disney.

The company announced late last summer that it planned to crack down on password sharing coming into 2024. At the time, coming off a second consecutive quarter of subscriber drop-off for Disney+, CEO Bob Iger called it a move to “drive monetization.”

Then in January, Disney warned subscribers of its platforms — Disney+, Hulu, and ESPN+ — it was updating the subscriber agreement and imposing “limitations on sharing your account outside of your household.” Those changes were effective as of January 25 for new subscribers and March 14 for current subscribers. 

During an earning call on Wednesday, Iger explained that while the company started its password-sharing initiative in June, it will take effect “in earnest in September.” The June rollout was limited to “just a few countries in a few markets,” Iger told CNBC earlier this year.

“By the way, we’ve had no backlash at all to the notifications that have gone out and to the work that we’ve already been doing,” Iger added.

CFO Hugh Johnston said the crackdown would “be helpful in terms of driving growth.”

Iger and Johnston did not, however, explain how the company would crack down on account sharing.

The subscriber agreement for Disney+ says accounts are only to be shared with a household, which is defined as “the collection of devices associated with your primary personal residence that are used by the individuals who reside therein.” The agreement also states that the company “may…analyze the use of your account to determine compliance with this Agreement.” Should an account be found violating the agreement, the company warns it “may limit or terminate access to the Service and/or take any other steps as permitted by this Agreement.”

The crackdown could be similar to Netflix’s efforts, which rolled out in the U.S. last year.

Netflix requires users to set their primary account location while signed in on a TV connected to their home Wi-Fi. Then, any devices connected to the same Wi-Fi network will be able to access the account holder’s Netflix account. Any devices trying to access from another location may be blocked. Those borrowing someone else’s Netflix account were given the option to either create their own account or become a sub-account on another user’s account.

While many were disappointed by the move, within six months of cracking down on account sharing, Netflix reported subscriber gains that surpassed projections.

Disney’s combined streaming business achieved profitability for the first time thanks to a strong three months for ESPN+ and a better-than-expected quarterly performance from the direct-to-consumer unit.

According to Iger and Johnston, ESPN had its most-watched third quarter in primetime in a decade among adults age 18-49. This was due to strong viewership in several areas, including the NBA finals, WNBA draft, NHL playoffs, and Stanley Cup finals.

Disney also reported that ahead of the release of “Inside Out 2” to theaters, the original “Inside Out” which came out in 2015, helped drive more than 1.3 million Disney+ sign-ups and generated over 100 million views worldwide.

The Associated Press contributed to this report.