Following in the footsteps of Netflix, streaming provider Disney+ is beginning its own anti-sharing campaign. “Later this year, we will begin to update our subscriber agreements with additional terms on our sharing policies, and we will roll out tactics to drive monetization sometime in 2024,” said Bob Iger, Disney CEO during an investor call in August.
According to its terms for US subscribers, US Disney+ subscribers can share titles with recipients who don’t currently have a Disney+ subscription, but they must be Disney+ subscribers to watch the title. Friends and family can subscribe to Disney+ through the web or via the Disney+ App.
In the US, Disney+ allows household accounts to have up to four active devices and up to seven active user profiles.
Anti-sharing initiatives have been effective, with caveats
In October, Netflix announced that it had added about 8.8 million subscribers during the third quarter of 2023, about triple what it gained in the same quarter a year earlier, beating analyst projections. One analyst observed that sign-ups more than doubled in the days after Netflix implemented its password-sharing policy.
But the opportunity is limited. “(We) anticipate seeing that for the next several quarters to come,” said Netflix Co-CEO Greg Peters. “And then just stepping back, there’s a set of borrowers that we’re not going to convert.” Eventually, Netflix will have to “go after (them) the same way we’re going after people who have never signed up for Netflix.”
Consumer goodwill is also not unlimited. In a survey of 19,000 adult Americans by analyst firm MoffettNathanson, more than two thirds of sharers and more than three quarters of borrowers under age 35 have developed a negative perception of Netflix.
Others are not joining in
During Paramount Global’s Q3 2023 investor call, CEO Bob Bakish expressed optimism about growth driven by the integration of Showtime programming into Paramount+, including the fact that usage among “Showtime users using Paramount+ content and vice versa.” Paramount+ was reaching more than 63 million subscribers as of Q3’s report.
Paramount has also begun offering live sports, and has further extended its distribution of movies and other original programming via partnerships with Walmart, in-flight access to Paramount+ on Delta Airlines flights, by providing CBS programming over Paramount+ internationally, and through further international growth of Pluto TV.
When asked about password sharing, Paramount does not “see that as a major headwind to our growth efforts,” said Paramount CFO Naveen Chopra. “Obviously, something that we will continue to monitor. And the good news is, I think there’s a template for how we could address that in a value accretive way.”
Disney+ is getting strict about password sharing, starting in Canada. Article. September 27, 2023. By Cheyenne MacDonald. Engadget
Netflix (NFLX) Q3 2023 Earnings Call transcript. October 8, 2023. Motley Fool
A first look at the impact of Netflix’s password sharing crackdown. Article. May 2023. By Brandon Brady. Antenna
Netflix’s password-sharing crackdown reels in subscribers as it raises prices for its premium plan. Article. by Michael Liedtke. October 18, 2023. Associated Press
Netflix’s crackdown on password sharing ws good for the bottom line, but bad for the brand. Article. October 16, 2023. by AJ Dellinger. Fast Company
Paramount Global (PARA) Q3 2023 Earnings Call Transcript. Nov. 2, 2023. Paramount Global (via Seeking Alpha)
Why it matters
Streaming providers must strike a balance between revenue and subscriber growth, anti-piracy campaigns and consumer goodwill. Paramount+ is enjoying good times at the moment, but a combination of changing market realities and evolving consumer expectations might result in a change to Paramount’s lack of an anti-credential sharing policy.
Netflix, for one, recognized this in its comments during its Q3 2023 investor call. “(We want) to stage things out based on borrower behavior. So, we want to show up with the right product experience at the right moment. That’s more likely to convert a borrower over rather than have them spin off. So, we want to think about that from maximizing long-term revenue.”
“Borrowers” are people who use shared credentials. So while they are converting to subscriptions, about 30% of these subscribers are opting for ad-supported services and advertising is also becoming more expensive over time.
Image source: Jason Goodman, Unsplash – Thank you.