Disney's full crackdown on password sharing is coming

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

• The Walt Disney Company hosted an earnings call on Wednesday.
• Executives said the company would crack down on password sharing in September.
• Disney also reported that its streaming business was profitable for the first time.

Disney said on Wednesday that it would crack down on password sharing next month.

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," CEO Bob Iger said during the call. "That kicks in, in earnest, in September."

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," he said. "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."

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

Disney struggled to profit from streaming operations after launching in 2019, but that's changed. The company said it made $47 million from its direct-to-consumer streaming businesses, 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 in February announced plans to crack down on password sharing. The new policy prohibits users from sharing subscriptions outside their households and says accounts suspected of sharing passwords 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 follows other streaming sites like Netflix, which grew its subscriber base after limiting password sharing and advertising its cheaper ad-supported option.

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