If you were hoping Disney would change its mind regarding its planned crackdown on Disney Plus account sharing, the latest news from the entertainment giant won't delight you: despite adding a slew of new subscribers over the past three months. According to Disney Plus, the company says it needs to make more money from streaming subscriptions, and cracking down on passwords is a key way to do that.
In the first three months of 2024, Disney added a whopping 6.4 million new subscribers, and core revenue per subscriber also increased (meaning not only did it add more people, but it also gets paid more per person). But that was offset by higher costs on the sports side, and Disney reported an operating loss for its streaming division (although that's nothing unusual among top streaming services). However, it says it expects streaming to be profitable in the fourth quarter of 2024, and that cracking down on passwords is a key part of that plan.
Why Disney's good news isn't good enough for investors?
It's clear that Disney's streaming business continues to grow at an impressive rate. But it doesn't appear to be healthy enough for investors, who worry that streaming isn't growing fast enough to offset declines in more traditional parts of the business, such as pay TV and movie theaters. Disney says it expects the streaming business “to be an important driver of future growth for the company” and, to do so, it aims to gain many millions of new subscribers. Disney believes that cracking down on passwords will convert a significant number of users into subscribers.
As the BBC reports, Disney has told investors that “a planned crackdown on passwords, starting in some countries this summer and rolling out globally in September, should help boost subscriber sign-ups in the coming months.” The idea is based on Netflix's experience, where the streamer found that its password crackdown caused more people to sign up for new subscriptions than to stop streaming.
Disney will also focus more on the guaranteed successes than on the potential risks of new films: according to CEO Bob Iger, the plan is to “step back a little to lean on the sequels” because “they are well-known and cost less in terms of marketing “. “While the aftermath of moana and deadpool aren't a bad thing, it does suggest that we'll also see less original content commissioned for streaming services if Disney becomes risk-averse to new stories, and that's probably not a good thing.
The company also said that “we learned our lesson” with Marvel and that we will make fewer shows and movies in the future.
Given the problems that crackdowns on password sharing cause (to those with limited funds or to children who move between different homes), it's frustrating to hear that we're including them in Disney Plus not because the company is struggling to attract new subscribers, but because impressive growth is not financially impressive enough. Unfortunately, not all of us have ways to grow our finances as well.
