Disney+ bans sharing of passwords
To generate more revenue, Netflix is banning the sharing of login credentials. Rival Disney+ is now following suit. The timing seems optimal: After many years of losses, the streaming service is reporting its first-ever quarterly profit.
Password freeloaders on the streaming service Disney+ will face the music starting in September. From then on, Disney plans to crack down on the sharing of login credentials across multiple households, as Disney CEO Bob Iger announced. Initial steps were taken as early as June. Disney hopes that more people will sign up for their own subscriptions if they can no longer log in with the accounts of family members or friends. This strategy has already paid off for Netflix.
Disney's streaming business reported its first-ever quarterly profit after years of losses in the previous quarter. The segment with Disney+ generated an operating profit of $47 million. A year ago, the segment had lost $512 million. Disney and other Hollywood studios have been on an expensive quest to catch up to Netflix for years. One reason is the decline in the business of cable television in the US, which used to be a reliable cash cow.
To stop the streaming losses, Disney CEO Bob Iger has recently tightened the belt on Disney+. This includes producing slightly fewer series and films from the "Star Wars" and Marvel worlds. Disney+ ended the quarter with 118.3 million households - a one percent increase from three months ago. Overall, the entertainment segment's operating profit was three times higher than the same quarter last year.
Disney's total revenue increases by four percent
This was also helped by the success of the animated film "Inside Out 2," which has grossed $1.56 billion so far. However, the operating profit in the segment with Disney's theme parks and cruise ships decreased by three percent to $2.22 billion. Consumer spending slowed down towards the end of the quarter, Disney explained.
Additionally, business in Disneyland Paris was held back by the Olympics. For the current quarter, Disney expects business to be at the same level as last year. The stock fell by more than three percent at the start of US trading.
On the corporate level, Disney exceeded market expectations with its quarterly results. Revenue increased by four percent to nearly $23.16 billion (€21.21 billion). Analysts had expected around $23 billion on average. Net income was $2.6 billion, compared to a loss of $460 million in the same quarter last year.
Netflix's decision to ban login sharing has encouraged Disney to do the same. Consequently, Disney will enforce its new policy against password freeloaders starting in September.
