Disney+ Follows Netflix's Footsteps In Password Sharing Crackdown: 'Borrowers' Will Have To Pay Up Or Get Booted Out

Bob Iger-led The Walt Disney Co. DIS announced that it will start cracking down on password sharing this summer, following in the footsteps of Netflix Inc. NFLX as it seeks to boost its subscriber base.

What Happened: During the first-quarter earnings call, Disney CFO Hugh Johnston stated that users with suspicious Disney+ activity will be asked to sign up for their own accounts.

"Beginning this summer, Disney+ accounts suspected of improper sharing will be presented with new capabilities to allow their borrowers to start their own subscriptions."

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Disney+ will also allow users to add people outside their households to their accounts for an "additional fee," just like Netflix. However, this option will be rolled out "later this calendar year."

Essentially, the password-sharing crackdown will begin first, and the ability to add users for a fee will come later.

Johnston thinks paid-sharing is an opportunity and also acknowledged that "our competitor is obviously taking advantage of, and one that sits in front of us."

"We've some very specific actions that we’re taking in the next couple of months."

Despite this, Johnston said Disney does not anticipate "notable benefits from their paid-sharing initiatives until the back half of calendar 2024."

"We’re looking forward to rolling out this new functionality to improve the overall customer experience and grow our subscriber base."

Why It Matters: Disney had started clamping down on password sharing outside of households back in October, however, its crackdown is going to get stricter now.

This comes at a time when the company is beginning to merge Disney+ and Hulu into a single app. The company has also begun cracking down on password sharing for Hulu accounts, updating its terms of service earlier in January to prohibit users outside a household from using a shared account.

Apart from Netflix, Alphabet Inc.'s GOOG GOOGL YouTube has also begun its crackdown on password sharing by enforcing the same household requirement. Due to this, YouTube Premium family subscribers will now have to be from the same household.

Netflix, which started its password-sharing crackdown before all of its competitors, has added an option to let users transfer their profiles to new accounts. Moreover, subscribers can also add users outside the household for an additional fee.

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