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First Netflix, now Disney: Bob Iger says the next password crackdown is coming

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Disney is chalking up new tactics to address account sharing on its streaming platforms after they lost more than $500 million.

The company narrowed its streaming losses to $512 million in its fiscal third quarter—but the loss added to pressure arising from massive restructuring costs.

CEO Bob Iger confirmed during an earnings call this week that in a bid to continue shrinking its streaming losses, Disney is “actively exploring” its options when it comes to users who share their subscriptions.

Putting an end to the practice would follow an unpopular but effective move from Netflix, which in May cracked down on the 100 million users that were splitting a single subscription between multiple households.

For Netflix, the gamble has paid off. In July, the company confirmed it had gained 5.9 million new subscribers because people were being forced to cough up for their own accounts—marking a subscriber increase of 8% for the second quarter of 2023.

That translated to sales growth of $8.2 billion for the quarter—and although Wall Street remained unimpressed by Netflix’s results, it’s the sort of turnaround Iger wants to start seeing at the House of Mouse.

“We are actively exploring ways to address account sharing and the best options for paying subscribers to share their accounts with friends and family,” he told analysts on the call. “Later this year, we will begin to update our subscriber agreements with additional terms on our sharing policies.”

Iger did not reveal what those changes would look like, or how closely Disney would follow Netflix’s lead.

The recently reinstated CEO did add, however, that unlike Netflix—which axed it’s lowest-price ad-free option this summer—Disney will not be upping prices on Disney+ and Hulu’s ad-supported accounts.

“Maintaining access to our content for as broad an audience as possible is top of mind for us,” he said.

However, Iger has hiked prices for subscribers who don’t want to deal with ads. From Oct. 12, ad-free Disney+ subscriptions will be increasing by 27% to $13.99 a month, while Hulu without commercials will increase 20% to $17.99.

Disney reported 146.1 million total Disney+ subscribers for the third quarter—a 7.4% decline from the previous quarter, and a larger loss than Wall Street had been anticipating.

Clawing back losses

The Disney+ price hikes and a clampdown on password sharing may be necessary to fill a near half-a-billion-dollar hole in the company’s finances.

Iger also hinted at spinning off some of Disney’s linear networks during the earnings call, which he has previously said may not be “core” to the company’s business.

Disney confirmed it had made an overall loss of $460 million in the three months to July, compared to a $1.4 billion profit for the same period a year earlier.

The loss was largely down to a $2.7 billion hit from restructuring and impairment charges.

Shortly after returning as chief executive, Iger announced that Disney would undergo a major restructure—including layoffs—in a bid to save $5.5 billion a year.

Despite the additional costs, however, Disney’s revenue continued to grow—rising 4% from $21.5 billion in its second quarter to $22.3 billion in the third quarter—and Iger appeared optimistic about the company’s long-term future.

“As I’ve said before, our progress will not always be linear,” the boomerang CEO said on Disney’s earnings call. “But despite near-term headwinds, I’m incredibly confident in Disney’s long-term trajectory because of the work we’ve done, the team we have in place, and because of Disney’s core intellectual property foundation.”

Unexpected bumps in the road are forming part of Iger’s narrative in his second tenure as CEO, after he returned to the helm of the entertainment giant last year in a bid to save the company.

These include the ongoing Hollywood strikes, which have seen thousands of writers and actors take to the picket lines over pay, working conditions, and concerns related to the use of A.I. in the film industry.

While Iger has publicly slammed the strikers’ demands as “disturbing” and not “realistic,” he insisted during the earnings call that insisted “nothing is more important to this company than its relationships with the creative community.”

“It is my fervent hope that we quickly find solutions to the issues that have kept us apart these past few months, and I am personally committed to working to achieve this result,” he said.



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