Hoping for popular series
Disney will no longer allow password sharing starting this summer
February 8, 2024, 3:21 a.m
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Netflix has been taking action against the sharing of login data since last year – it hasn’t done any harm, on the contrary. Now Disney, the second streaming giant, wants to stop sharing passwords. So far the business is not profitable.
The streaming service Disney+ wants to implement the action it announced months ago against password free riders in the summer. Disney currently allows accounts to be shared, but in the future users outside of a shared household will have to pay for their own subscription. Netflix has been cracking down on password sharing for months and has gained significantly more subscribers as a result.
Disney wants to bring its streaming business into the black by the end of September. In the last quarter, the division posted an operating loss of $216 million. Tackling password free riders risks alienating disgruntled users. However, Disney is hoping for the attractiveness of its streaming offering with films and series such as “Star Wars” and the Marvel superheroes.
Disney boss Bob Iger is also betting big on the games business. The group is investing $1.5 billion in the developer company Epic Games (“Fortnite”). Together they want to develop a “Disney universe” in which, among other things, you can buy games as well as virtual and later perhaps physical items, said Iger on the TV channel CNBC. It should exist alongside Epic’s online game “Fortnite” but be linked to it. However, development could take “a few years,” Iger said.
Theme parks are drawing horses
Disney once again benefited from strong business with its theme parks and cruise ships in the last quarter. The theme park and merchandise business brought in an operating profit of $3.1 billion on $9.1 billion in sales last quarter.
Wall Street’s focus for months has been on changes in the entertainment giant’s media business. The cable TV business in the US, which has been a reliable moneymaker over the years, is shrinking – as more and more people switch to streaming. Like other Hollywood companies, Disney set up its own streaming service and accepted high losses in order to catch up with industry leader Netflix.
In the last quarter, sales in cable TV fell by twelve percent to $2.8 billion, as Disney announced after the US stock market closed. The division also posted an operating profit of $1.24 billion – seven percent less than a year earlier. Revenues in the streaming business with Disney+ and the sports offering ESPN+ rose by 14 percent to a good six billion dollars. The operating loss of $216 million was already a significant improvement compared to the $1 billion loss a year ago. At the same time, the number of subscribers to the core Disney+ offering fell by one percent to 111.3 million. The group expects an increase of 5.5 to 6 million users in the next few months. Netflix recently had over 260 million customer households.
A year ago, Iger set a goal of reducing costs by $7.5 billion. The savings will probably be even higher, he said. The theme parks and merchandise business brought in an operating profit of $3.1 billion on $9.1 billion in sales in the last quarter.
Disney’s consolidated sales remained virtually unchanged at $23.5 billion. Quarterly profit rose from $1.28 to $1.9 billion. The austerity measures contributed around $500 million to this, emphasized Iger. Disney shares rose almost seven percent in after-hours trading.