Disney hikes some streaming prices, eyes crackdown on password-sharing

The Walt Disney Company is exploring ways to crack down on password-sharing and raise the price on some of its premium streaming tiers amid a priority to turn its direct-to-consumer (DTC) streaming unit into a profitable business.

Disney is "actively exploring ways to address account sharing and the best options for paying subscribers to share their accounts with friends and family," Bob Iger, the exec who returned as Disney's CEO in November 2022, said Wednesday on the company's fiscal Q3 2023 call.

Disney hasn't announced any new password-sharing policies, but the company expects to update its subscriber agreements with some of those details and then roll out "tactics to drive monetization sometime in 2024," Iger said. Disney's current subscriber agreements prohibit subs from sharing logins with third parties, but doesn't elaborate with respect to how subscriptions are shared with friends and family members who might live outside the subscriber's household.

Iger didn't pinpoint how many Disney streaming subs are sharing passwords other than to say that the company already has the technical capability to monitor it and that there's a "significant" number of customers who are sharing passwords.

"We're going to get at this issue" in calendar 2024, he said. "[W]e certainly have established this as a real priority and we actually think that there's an opportunity here to help us grow our business."

Though Disney hasn't detailed how it will crackdown on password-sharing, the plan to implement such measures follows a similar crackdown that's well underway at streaming rival Netflix. Netflix recently expanded the rollout of its "paid sharing" plan to 100 countries and attributed the new policy to some of the subscriber gains it saw in the second quarter.

Price hikes

Disney also pushed forward with price increases for the standalone premium tiers of Disney+, Hulu and ESPN+ in the US, effective October 1. The ad-free Disney+ Premium tier rises $3, to $13.99 per month, the ad-free Hulu subscription VoD service also goes up by $3 to $17.99 per month, and ESPN+ will go up by $1 to $10.99 per month. Disney still offers discounted pricing on bundles of Disney+ and Hulu SVoD and the combo of Disney+, Hulu SVoD and ESPN+.

There's no change to the monthly $7.99 per month price on the ad-supported tier of Disney+. Iger noted that about 3.3 million subs are on the ad-supported Disney+ plan, with 40% of new Disney+ subs selecting it since its US launch in December 2022.

Iger said the ad-supported Disney+ option will launch in Canada and select markets in Europe on November 1.

Iger also reiterated that Disney is working toward a "unified one-app experience" that will combine access to its various brands and franchises.

Mulling ESPN's DTC future

Iger also touched on Disney's intention to someday offer the flagship ESPN channels under the direct-to-consumer streaming model, a decision that would certainly apply even more pressure on the already-struggling traditional pay-TV business.

Offering ESPN under DTC "is not a matter of if, but when," he said. "The team is hard at work looking at all components of this decision, including pricing and timing."

Disney is considering partners for ESPN's move to the DTC model. Iger said those discussions are ongoing, with a focus on distribution and marketing support, rather than deals that would involve an infusion of cash. And he also opened the door to partnerships that would help ESPN to expand its content slate.

"We're looking for partners that are going to help ESPN successfully transition to a DTC model. And that, as I've said, can come in the form of either content or distribution and marketing support or both," Iger said.

Financial snapshot

Those ideas are percolating as Disney's legacy linear networks unit continued to struggle – with revenues at the unit dropping 7%, to $6.69 billion.

"While linear remains highly profitable for Disney today, the trends being fueled by cord-cutting are unmistakable," Iger said, noting that the company is exploring "a variety of strategic options" for the unit.

Disney's DTC business generated fiscal Q3 2023 revenues of $5.52 billion, up 9% year-over-year. Thanks to recent cost cuts and streamlining, losses at the DTC unit came in at -$512 million in the quarter, narrowed from a year-ago loss of -$1.06 billion. Iger said Disney is working toward achieving DTC profitability by the end of fiscal 2024.

"We've reset the whole business around economics designed to deliver significant, sustained profitability," he said.

Turning to DTC subscribers, Disney+'s "core" base (excluding the Disney+ Hotstar service in India, Malaysia and Thailand) rose by 800,000 subs, ending the period with 105.7 million subs. However, Disney+ lost about 300,000 subs in the US and Canada, lowering that total to 46 million. Hulu's SVoD service added 300,000 subs, for a total of 44 million, and ESPN+'s base held steady at 25.2 million.

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— Jeff Baumgartner, Senior Editor, Light Reading