The shift in the digital landscape is underway, with Disney’s streaming services — notably Disney+ — spearheading a movement to minimize password sharing across platforms. This move that Disney has embarked on is not merely an isolated action, but rather a reflection of a bigger issue in the streaming industry. Streaming services lose significant potential revenue due to password sharing, and Disney’s crackdown is an important development for the industry’s future.
One might wonder the significance of password sharing and its effects. Generally, when customers purchase a subscription service, they have the freedom to utilize the service across various devices. However, this has resulted in the ease of sharing a single account across households, friends, and even to an extensive extent—virtual strangers. This phenomenon has resulted in revenue loss for streaming service providers. In the United States alone, CNBC reported that password sharing cost streaming services approximately $9.1 billion in 2019, a figure expected to rise to nearly $13 billion by 2024.
Disney’s popular streaming platform, Disney+, has garnered millions of subscribers since its launch in November 2019. In a move likely spurred by the aforementioned trends, Disney started testing more stringent password sharing restrictions in March 2022. These new rules would monitor the number of devices streaming simultaneously and prompt verifications for new devices through email or text. This way, the platform restricts access to only those who the primary subscriber allows, effectively reducing the potential financial losses.
The Disney+ test was initially rolled out in South America, affecting Disney+ accounts in Chile, Costa Rica, and Peru. Users received notifications that they needed to confirm that they were part of the same household as the primary account holder. With this test, Disney joined other streaming platforms, like Netflix, that had already begun making strides to control password sharing.
Netflix introduced a similar idea in 2021, trialing a plan to reduce password sharing in select countries. The company asked some users to verify their accounts through a code sent to the owner’s email or phone number. It was a clear indication of the streaming industry’s increasing pressure to limit password sharing in a way that doesn’t alienate subscribers.
However, while Disney+ is following in Netflix’s footsteps, it’s also charting its own path with its household verification system. Disney+ offers a GroupWatch feature, allowing subscribers to watch Disney+ content with friends and family remotely. The feature lets up to seven people watch the same stream together, but each viewer must have a Disney+ subscription. Through this, Disney+ encourages legal sharing and collective viewing, while ensuring every viewer has a legitimate subscription.
Disney’s crackdown on password sharing reflects larger trends within the streaming industry. Companies are finding themselves tasked with the challenge of maintaining customer satisfaction while mitigating revenue losses due to account sharing. With the rise of OTT (over-the-top) platforms, this balance will become even more crucial.
Moreover, Disney’s shift also indicates a possible new direction in the streaming industry’s approach towards customer convenience and revenue generation. While the move might seem restrictive to subscribers considering password sharing as an informal norm, it still emphasizes the need for sustainable and fair consumption of digital content. By cracking down on password sharing, streaming service providers like Disney+ are helping shape an ecosystem where digital content creators and consumers can mutually benefit.
