Disney is preparing to implement a more rigorous crackdown on password sharing across its streaming platforms—Disney+, Hulu, and ESPN+—starting next month. This move, which has been anticipated since last year, marks a significant step in the company’s strategy to enhance revenue and maintain its competitive edge in the streaming market.
The decision to tighten control over account sharing was first announced by Disney CEO Bob Iger last summer, following two consecutive quarters of subscriber declines for Disney+. At that time, Iger framed the move as essential for “driving monetization” of Disney’s streaming services. The timing of the crackdown is no coincidence, as Disney, like many other streaming services, is under pressure to maximize revenue and address the challenges of a maturing market where subscriber growth has slowed.
In January of this year, Disney began laying the groundwork for this crackdown by updating the subscriber agreements for all its streaming platforms. These agreements now explicitly state that accounts are intended to be shared only within a single household. According to Disney’s definition, a household comprises the collection of devices associated with the primary residence of the account holder and used by individuals living there. The updated terms came into effect on January 25 for new subscribers and on March 14 for existing ones, signaling Disney’s intent to ensure that its customers are fully aware of the new limitations.
During a recent earnings call, Iger provided more details about the company’s approach to enforcing these new rules. He explained that Disney began its password-sharing initiative in June, but this initial phase was limited to a few markets in select countries. The company used this period to test its methods and gauge user reactions. Starting in September, however, Disney plans to implement the crackdown more broadly, making it clear that it is serious about curbing account sharing.
CFO Hugh Johnston reinforced the importance of this initiative, stating that cracking down on password sharing will be a key factor in driving subscriber growth. Disney believes that by ensuring each account is used by paying customers within a single household, it can unlock significant revenue potential and improve the financial performance of its streaming services.
Despite the upcoming changes, Iger noted that the company has not faced significant backlash from users so far. The notifications and initial actions taken in June have been met with minimal resistance, which could indicate that Disney’s approach has been measured and well-communicated. However, the company has yet to reveal the specific tactics it will use to enforce these new restrictions. Industry observers expect that Disney might adopt a model similar to Netflix, which implemented its own password-sharing crackdown last year.
Netflix’s strategy involved requiring users to set a primary account location tied to their home Wi-Fi network. Any devices attempting to access the account from outside this network would be blocked unless the user opted to create a separate sub-account. Although this move initially disappointed many users, Netflix reported that within six months, it had gained more subscribers than expected, demonstrating the effectiveness of the strategy. Disney is likely aiming for a similar outcome as it prepares to roll out its own enforcement measures.
This crackdown comes at a time when Disney’s streaming business is experiencing a positive shift. For the first time, Disney’s combined streaming services—including Disney+, Hulu, and ESPN+—achieved profitability. This success is partly due to a strong performance from ESPN+, which had its most-watched third quarter in a decade among adults aged 18-49. The network benefited from high viewership during key events such as the NBA Finals, WNBA Draft, NHL Playoffs, and Stanley Cup Finals, all of which contributed to robust audience engagement.
In addition to sports content, Disney’s streaming platforms have also seen success with their original programming. For example, ahead of the theatrical release of “Inside Out 2,” the original “Inside Out” film from 2015 played a significant role in attracting new subscribers. The movie helped drive over 1.3 million sign-ups for Disney+ and generated more than 100 million views worldwide, underscoring the enduring appeal of Disney’s content library.
As Disney moves forward with its password-sharing crackdown, the company will be closely monitoring the impact on its subscriber base. While the goal is to boost revenue and ensure that each account represents paying customers within a single household, Disney will need to manage customer expectations carefully to avoid alienating users who have grown accustomed to more lenient account-sharing practices. The success of this initiative will depend on how well Disney can balance the need for increased monetization with maintaining a positive user experience.