NewsWire: 11/18/2020
- With 73 million subscribers so far, the first year of Disney+ has been an unqualified success. The company’s success in streaming has sent its shares higher even as Disney continues to see huge losses from its other (mostly closed) businesses. (The New York Times)
- NH: It’s been a tough year for Disney (DIS). Most of its theme parks are closed, its major movie releases have been postponed, and the company is hemorrhaging money. According to its latest earnings report, Disney saw 82% decline in their Q4 operating income and had a net loss of more than $700 million.
- But there’s one bright spot: streaming video. Disney+, which launched 11 months ago, had 73.7 million paid subscribers at the start of October--a figure that’s well within their initial five-year subscriber target of 60 to 90 million. Of all the new streaming services that have launched recently, such as Peacock and Apple TV+, Disney+ has attracted by far the most subscribers.
- Audience surveys indicate that the service’s core audience is whom you might expect: families with school-age children. Fully 49% of Millennial parents tune into Disney+ at least once a week, according to Morning Consult. But the share of childless Millennials (33%) and Homelanders (44%) who do the same isn’t much lower.
- Part of what has fueled Disney+’s success is the all-ages appeal of its many decade-spanning brands (think Marvel, Star Wars, and Pixar films). Disney+ launched primarily as a showcase of Disney’s massive content library, with some--but not a lot--of original programming. At $6.99/month, it’s also cheaper than the competition. Both of these decisions paid off. The showcasing of timeless classics fits perfectly with the family-reconnecting mood of America during the plague years.
- Last month, Disney CEO Bob Chapek reorganized the company to put the focus squarely on streaming. Though the company’s traditional brands (theme parks, cruises, theatrical films, etc.) are expected to recover after the Covid-19 pandemic, this suggests that Disney is betting that the future lies not with Walt Disney Co., but with Disney+. And it’s not alone: Disney’s restructuring came several months after WarnerMedia, HBO’s parent company, made similar moves to organize around its new streaming service, HBO Max.
- Under Disney’s old business model, different divisions created content for specific platforms. The film business created movies to be released in theaters, for instance, and the cable networks made shows to be broadcast on TV. Now the company has a single content division and a distribution division that decides how it would best be released. And during a pandemic, the answer to that is most often going to be “on Disney+.”
- To retain subscribers, the next logical move for Disney+ would be to bulk up its original content. It could do so by, say, releasing more big-budget movies straight onto the service instead of into theaters (like it did with the Mulan remake). All signs indicate that Disney is going all-in on online distribution in hopes of becoming the next Netflix--and the edge they hold in content is the main advantage that sets it apart from all the other companies fighting over streaming TV scraps.
