- Disney+ is breaking up password sharing
Starting September, password freeloaders on the streaming service Disney+ will face serious consequences. Disney plans to crack down on sharing login credentials beyond a single household. The company has already taken initial steps since June, as announced by Disney CEO Bob Iger.
Disney hopes that more people will sign up for their own subscriptions if they can't log in using family members' or friends' accounts. This strategy has already proven successful for Disney's competitor, Netflix.
In the last quarter, Disney's streaming business finally turned a profit after years of losses. The Disney+ division reported an operating income of $47 million, compared to a loss of $512 million in the same period last year.
Disney and other Hollywood studios have been playing catch-up to Netflix for years. One reason for this is the decline in cable television revenue in the United States, which used to be a reliable source of income.
To curb streaming losses, Disney CEO Bob Iger has implemented cost-cutting measures for Disney+, including reducing the production of "Star Wars" and Marvel content. Disney+ ended the quarter with 118.3 million households, a 1% increase from the previous quarter.
Overall, Disney's entertainment segment reported an operating income of $1.2 billion, three times higher than the same period last year. This includes the success of the animated film "Soul," which has grossed $1.56 billion so far.
However, Disney's parks, experiences, and products segment saw a 3% decrease in operating income to $2.22 billion. Disney attributed this to decreased consumer spending towards the end of the quarter and the impact of the Olympics on Disneyland Paris. For the current quarter, Disney expects business to be at the same level as last year. Disney's stock initially fell by more than 3% at the start of US trading, but the loss was later reduced.
On a corporate level, Disney exceeded market expectations with its quarterly results. Revenue increased by 4% to nearly $23.16 billion ($21.21 billion in euros), surpassing analysts' average estimate of around $23 billion. Net income was $2.6 billion, compared to a loss of $460 million in the same period last year.
The detailed quarterly report also revealed that Disney has invested $1.5 billion for an 8% stake in Epic Games ("Fortnite"). Additionally, Disney warned that the full acquisition of the American streaming service Hulu could cost up to $5 billion more than the previously agreed minimum of $27.5 billion. Disney is currently negotiating the price with Hulu's owner, Comcast, and the final amount will depend on the assessment of an evaluator.
The media widely reported Disney's decision to crack down on password sharing on Disney+, which could potentially impact users reliant on shared accounts. Subsequently, some analysts suggested that this move could increase Disney+ subscriptions, emulating Netflix's successful strategy.
