Streaming in the U.S., as in Canada and Western Europe, is reaching a ceiling of new customer engagement. While I won’t judge “how close the margins are,” there is one undeniable truth – most of those who could be engaged are already engaged, subscribed, and loyal subscribers. For a long time, attracting new streaming subscribers was built around the idea that you’d be better off paying a couple of dollars and getting tons of content in a few clicks. As Netflix once tweeted, “Love is sharing passwords.”
It was just the dawn of streaming when they were fighting not only for audiences with each other but also to make streaming the new standard. С
Times have changed, and the streaming industry struggles to come after those who share passwords. The solution seems obvious: force those who watch streaming to buy a separate subscription. For a long time, sharing passwords was a way to save money: add friends or relatives you don’t live in the same house to a shared subscription.
2023 puts an end to that. The password-sharing crackdown started with Netflix, and then Disney+ and Hulu joined in, rolling out new rules for new subscribers immediately, starting January 25, 2024. Existing subscribers will have until March 14, 2024, before the new password-sharing rules go into effect.
The other things that have changed are the prices and what you get. Prices have gone up, and streaming has started to feel significantly more expensive than it did before. It was a combination of two highly unpleasant factors that all companies combined together: the price increase and the need to subscribe if you shared passwords before. The result was a double burden, where users first felt the impact of the fact that they couldn’t just borrow an account from a friend and pay in installments. Then, they realized they would have to pay more for the subscription than they had collectively paid.
How 2023 went for streaming services
For 2023, among the top four players, Disney+ and Hulu lost subscribers, Netflix gained subscribers, and there’s still no data on Max.
Disney+, which recently set a record for the number of subscribers, reaching an all-time high, lost 7% of subscribers by the end of 2023, most left after information about the password-sharing crackdown.
Disney also controls Hulu, which lost 3% of its total subscribers.
Netflix, on the contrary, increased its subscribers by 13% in 2023, one of the company’s best results in recent years, especially after Netflix lost subscribers for two quarters in a row in 2022.
It’s a little more complicated
It seems insufficient to pressure your subscribers to buy a subscription instead of sharing. The problem lies more profoundly and often in the added value and engagement. Looking at engagement, Disney+ has an average of about 152 minutes per user. Whereas Netflix has a figure of 368 minutes, that’s more than double.
The main difference between the two services is precisely that. Netflix subscribers may have a dashing word to say about a company that raises prices and makes them pay twice, but they’re not ready to give up the service. The truth is that Disney+, like Hulu, has sacrificed some of the disloyal subscribers who signed up to share subscriptions with other people.
Although the results for the fourth quarter show that Disney managed to win back some subscribers, it was still a wake-up call that primarily emphasizes that there are too many streaming services. People could argue that they needed to have 3-4 subscriptions to watch whatever they wanted as long as it was relatively cheap. Still, the tightening of password-sharing rules and price increases force people to reassess their priorities. Including dropping subscriptions, they don’t prioritize.