Disney's full crackdown on password-sharing is coming

Disney executives discussed the company's streaming operations during an earnings call. It's crackdown on password sharing starts in September.

• The Walt Disney Company hosted an earnings call on Wednesday.
• CFO Hugh Johnston said the company will crackdown on password-sharing in September.
• Disney also reported that its streaming business is profitable for the first time this quarter.

Disney will crackdown on password-sharing next month, the company said on Wednesday.

Disney executives discussed its streaming operations during its third-quarter earnings call. The media giant owns Disney+, Hulu, and ESPN.

"We started our password-sharing initiative in June. That kicks in, in earnest, in September," CEO Bob Iger said during the call.

Hugh Johnston, Disney's chief financial officer, said the company hoped to achieve "double-digit margins" with its direct-to-consumer operations.

"Password-sharing is just starting to roll out. That's also going to be helpful in terms of driving growth. We've announced pricing and we feel good with all of the value that we're providing to consumers," he said.

Disney also announced its new subscription tier on Tuesday and said new prices for its streaming services would go into effect beginning October 17.

Disney has struggled to profit from streaming operations since it launched in 2019, but that's finally changed. The company said it made $47 million from its direct-to-consumer streaming businesses, which is the first time those operations have made money.

"This better-than-expected performance, combined with our profitable results at ESPN+, resulted in positive profitability at our combined DTC streaming businesses for the first time and one quarter ahead of our previous guidance of achieving profitability in Q4," Disney said in a statement.

Disney first announced its plans to crackdown on password-sharing in February. The new policy prohibits users from sharing subscriptions outside their households, and accounts suspected of password-sharing could be terminated.

"We're looking forward to rolling out this new functionality to improve the overall customer experience and grow our subscriber base," Johnston said during Disney's first-quarter earnings call.

Disney's crackdown follows streaming sites like Netflix, which grew its subscriber base after limiting password-sharing and advertising its cheaper, ad-supported option.

Netflix co-CEO Ted Sarandos said in a January earnings call that the company was "thrilled" with user engagement following its crackdown on password sharing.