If you were hoping that Disney would have a change of heart regarding its planned Disney Plus account-sharing crackdown on account sharing, the latest news from the entertainment giant won't delight you: despite adding massive numbers of new subscribers in the last three months to Disney Plus, the company says it needs to make more money from streaming subscriptions – and password crackdowns are a key way of achieving that.
In the first three months of 2024 Disney added a massive 6.4 million new subscribers, with the core revenue per subscriber going up too (ie, not only did it add more people, but it's also getting paid more per person). But that was offset by increased costs in the sporting side of things, and Disney reported an operating loss for its streaming division (though is not unusual at all among the best streaming services). However, it says that it expects streaming to become profitable in the fourth quarter of 2024, and the password crackdown is a key part of that plan.
Why isn't Disney's good news good enough for investors?
It's clear that Disney's streaming business is still growing at an impressive rate. But it doesn't appear to be healthy enough for investors, who are concerned that streaming isn't growing fast enough to balance the declines in more traditional parts of the business such as pay TV and movie theaters. Disney says that it expects the streaming businesses "to be a meaningful future growth driver to the company", and in order to do that it intends to sign up many millions of new subscribers. The password crackdown, Disney believes, will convert significant numbers of sharers into subscribers.
As the BBC reports, Disney has told investors that "a planned password crackdown, which will start in some countries this summer and roll out globally in September, should help drive subscriber sign-ups in the months ahead." The thinking is based on Netflix's experience, where the streamer found that its password crackdown caused more people to take out new subscriptions than to stop streaming.
Disney is also going to focus more on guaranteed hits than the potential risks of new movies: according to CEO Bob Iger the plan is "swinging back a bit to lean on sequels" because "they're known and cost less in terms of marketing." While sequels to Moana and Deadpool are no bad thing, it does suggest that we'll also see less original content commissioned for the streaming services if Disney is becoming risk-averse to new stories, and that's probably not a positive thing.
The company also said that "we learned our lesson" with Marvel, and will do fewer shows and movies in the future.
Given the problems that password-sharing crackdowns cause – to those with limited funds, or for kids moving between different households – it's frustrating to hear that we're getting them on Disney Plus not because the company is struggling to attract new subscribers, because it's impressive growth isn't financially impressive enough. Alas, we don't all have ways to grow our own financials so well.
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