According to CNBC, Disney CEO Bob Iger, the initial rollout will be limited to “just a few countries in a few markets” before expanding to a full-scale launch in September. The decision to tackle password sharing is part of Disney’s broader strategy to achieve profitability in its streaming business by the end of the 2024 fiscal year.
Integration Challenges, Milestones
The password-sharing crackdown comes on the heels of Disney’s recent launch of the integrated Disney+ and Hulu app, designed to increase subscriber engagement and reduce so-called churn rates. The merged app combines content and watch history from both services, leveraging recommendation engines to enhance the user experience.
During the same CNBC interview, Iger emphasized the importance of these technological tools in creating a “stickier” streaming experience, stating, “We need the technological tools to lower churn, create more stickiness. It’s things like recommendation engines, getting to know our customers better.”
In addition to the password-sharing restrictions and the Disney+ and Hulu integration, Disney is working on unifying user identities across its various platforms, including ESPN and cable services. This unified identity system will be crucial in enforcing the password-sharing crackdown effectively.
Ultimately a Business Move
This move to limit password sharing is expected to help Disney reach its goal of achieving double-digit margins in its streaming business over the long term. In fact, Iger has consistently expressed confidence in the company’s ability to turn its streaming services into a profitable growth business.
For one thing, he seemed very proud of the robustness of the company’s content library. As controversial as the movie industry had been as of late, this still included (historically) popular franchises and solid hits from Pixar, Marvel, Lucasfilm, and Disney itself, as well as from 20th Century Fox.
Of course, it remains to be seen how subscribers will react to the new restrictions and potential additional costs reflected by this crackdown. Netflix did successfully provide the first example of boosting subscriber numbers following its crackdown. As such, other streaming services will likely follow suit, not just to combat revenue loss due to password sharing, but also as a measure to keep up.
