Why Disney's Bob Iger called Netflix 'the gold standard' in streaming

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Disney (DIS) CEO Bob Iger praised the company's biggest streaming competitor on Tuesday after detailing plans for its own upcoming crackdown on password sharing.

"Obviously, we're heartened by the results that Netflix has delivered in their password-sharing initiative and believe that it will be one of the contributors to growth," the executive said during the media giant's second quarter earnings call.

He noted that Netflix was "in many respects, the gold standard when it comes to streaming."

"What we're building is the technology that Netflix has had in place and has been building for well over a decade to improve the business from a bottom-line perspective," he added. "That starts with password sharing."

Netflix (NFLX) began implementing its password-sharing crackdown for US subscribers in May after first announcing the initiative in October 2022. It's a classic tale of follow-the-leader as Netflix remains the only consistently profitable streaming service and others in the industry attempt to catch up.

Warner Bros. Discovery's (WBD) Max streaming service will also begin to restrict password sharers later this year, with a wider rollout expected in 2025, Yahoo Finance confirmed.

Executive Chairman of the Walt Disney Company, Bob Iger arrives at the world premiere for the film 'The King's Man' at Leicester Square in London, Britain December 6, 2021. REUTERS/Hannah McKay
Bob Iger arrives at the world premiere for the film 'The King's Man' at Leicester Square in London, Britain, Dec. 6, 2021. (REUTERS/Hannah McKay) (REUTERS / Reuters)

Iger said Disney's crackdown will begin next month in select markets with a more global launch slated for September. He first revealed the company would address password sharing last year after noting the number of subscribers sharing accounts is "significant."

"We're starting to go after people who are sharing passwords improperly," he said on Tuesday. "We feel quite bullish about it."

Iger's comments come as Disney looks to achieve sustained profitability in streaming, a key priority as its linear TV business declines.

In the company's fiscal second quarter, the direct-to-consumer (DTC) portion of its entertainment segment, which includes Disney+ and Hulu, turned a profit for the first time. Still, the company warned it expects weaker results in that segment for the current quarter.

Additionally, not all of Disney's streaming services were profitable in Q2. Including ESPN+, total direct-to-consumer losses amounted to $18 million versus the $659 million loss reported in the year-earlier period. Disney still expects full streaming profitability by its fiscal fourth quarter of this year.

Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at [email protected].

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