This is the year of the password-sharing crackdown

This is the year of the password-sharing crackdown
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This is the year of the password-sharing crackdown
Disney+ is the latest streaming platform to put an end to password sharing.

  • Disney+ is the latest streaming platform to announce a crackdown on password-sharing.
  • Hulu, also owned by Disney, has taken similar steps, and Netflix did the same last year.
  • Companies across sectors are moving to tighten their subscription terms, one analyst says.

Streaming companies turned a blind eye to password-sharing for years.

But 2024 is shaping up to be the year the streamers say bye-bye to being Mr. Nice Guy.

Disney+ is the latest casualty. Users of the family-oriented streaming platform received emails this week notifying them of changes to the terms of service. Now, accounts are explicitly prohibited from sharing subscriptions outside the “household.”

Disney says that it may “limit or terminate access” for accounts found to be sharing passwords. The terms do not detail how those accounts will be identified.

“Disney+ accounts suspected of improper sharing will be presented with new capabilities to allow their borrowers to start their own subscriptions,” said Disney CFO Hugh Johnston in Wednesday’s first-quarter earnings call.

The updated terms will take effect on March 14 for users with existing accounts; new subscribers since January 25 have already been subject to them. Johnston said the company would start enforcing the new rules in the summer.

“We’re looking forward to rolling out this new functionality to improve the overall customer experience and grow our subscriber base,” Johnston said.

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The new terms note that different service tiers may permit some degree of password-sharing — if you’re willing to pay. There’s no trace of that yet on Disney’s pricing tier website, but Johnston suggested that an extra paid tier would be available later this year.

“While we are still in the early days and don’t expect notable benefits from these paid sharing initiatives until the back half of calendar 2024, we want to reach as large an audience as possible with our outstanding content,” he said.

Disney’s updated terms of service are almost identical to those of Hulu and ESPN+, which were also announced on January 25. Disney owns both platforms in addition to Disney+.

The new restrictions have been expected for months. In August, Disney CEO Bob Iger said the company was “actively exploring ways to address account sharing,” along with new price increases for streaming services.

Iger’s comments came in the wake of Netflix’s successful crackdown earlier last year, when the streaming giant announced it would start charging $8 for users outside the household.

Netflix moved to stiffen its streaming rules after recording its first subscriber loss in over a decade in 2022. Its subscriber numbers have since rebounded.

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Disney+ has also lost subscribers for four of the past five quarters, including the first quarter of 2024. Nevertheless, Johnston said the company was “confident in our prospects for ongoing sub growth over the longer term,” partly due to its “paid sharing efforts.”

To some degree, the move toward tightening account rules is “natural,” Nicholas De Leon, a technology analyst at Consumer Reports, told Business Insider.

“We’ve had 10-plus years of these companies more or less looking the other way,” De Leon said. “Netflix, Spotify, and so on and so forth. And now, the business environment has changed.”

A spokesperson for the Streaming Innovation Alliance, a trade association that includes Disney and Netflix, declined to comment on its members’ specific business practices.

It’s not just streamers that want people to pay for their own accounts. Last year, Costco said it would require shoppers to show their membership cards — which have photo ID — at self-checkout lanes. Costco makes most of its profit from membership fees.

It could be the first of many, De Leon said. “I definitely could see other sorts of industries following in the footsteps of Disney and so forth,” he said.

“As we see more services go to subscription, I think you’ll find companies trying to limit what they would consider abuse of that system,” he added.

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Other streaming platforms have limits on the number of concurrent streams (i.e. people watching at the same time). And both Amazon Prime Video and Apple TV+ have features allowing up to six people to share subscriptions (though technically with different accounts). But they don’t have the same location restrictions pioneered by Netflix — yet.

The challenge companies face in transitioning toward strict account-sharing enforcement is making their service worth it for consumers — without losing them entirely.

De Leon suggested that consumers may be more willing to swallow the pill of account restrictions if given some choice, like optional, tiered pricing systems. “There are different ways to slice this pie,” he said.

And while he said that consumers will probably stomach the changes in the long run, that doesn’t mean they’ll like it.

“If you’re used to doing a thing, and then all of a sudden you can’t do that thing, there are going to be some growing pains,” he said.

Read the original article on Business Insider

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