Disney Plus to Launch Password Sharing Fee, CEO Confirms

Disney CEO Bob Iger has announced plans to introduce a new policy aimed at curbing password sharing among Disney Plus subscribers, with the rollout expected to commence in June. In an interview with CNBC, Iger disclosed that the initiative will begin in “just a few countries in a few markets” before expanding to all subscribers by September this year.

The move marks Disney’s “first real foray into password sharing,” following the implementation of its anti-password sharing rules for new subscribers on January 25th and existing members on March 14th.

Netflix took a similar action against password sharing in 2023, which introduced an additional $7.99 monthly fee for users sharing passwords outside their households. The change helped Netflix add 13.12 million new subscribers by the end of 2023, growing its subscribers to a dominating 260 million global paid memberships.

Hugh Johnston, Disney’s chief financial officer, confirmed during an earnings call in February that subscribers suspected of improper sharing would receive prompts to sign up for individual subscriptions starting this summer.

Subscribers will also have the option to add members outside their household for an extra fee, although specific pricing details have yet to be disclosed. It’s also not clear how Disney will monitor whether a user is from a household or not. Its Terms of Service only allow a subscription to be used within a household, which refers to everyone living at a particular residence.

Until now, it’s common for passwords to be frequently shared among friends and family, which is outside of Disney’s definition of a household.

Disney Plus has also launched the combined Disney Plus and Hulu app, which is part of the company’s efforts to bolster its streaming bundle and enhance user engagement. The integrated app seamlessly merges content from both platforms and leverages combined watch histories to optimize recommendations, aiming to increase subscriber engagement and retention. In the US, Disney Plus also bundles in Hulu and ESPN sports.

“We feel great about the engagement of those Disney subs who are not getting Hulu who are now watching more programs that were on Hulu, including Shogun,” Iger commented to CNBC. He emphasized the importance of technological tools, such as recommendation engines, in fostering customer loyalty and reducing churn.

In addition to addressing password sharing, Disney is working to unify user identities across its streaming platforms, which will help it enforce the new policy. “As pointed out by my colleague David Pierce, Disney is also working to ‘unify identities so that who you are on the Hulu app is connected to who you are on Disney Plus and ESPN and your cable box’ — a vital tool for a password-sharing crackdown.”

Iger outlined ambitious plans for Disney’s streaming business, including the development of a streaming-only version of ESPN, with profitability targeted by the end of the fiscal year.