The streaming war is getting interesting by the day as new news comes up every month that gives a new turn to this competitive SVoD landscape. From mergers and acquisitions to quarterly reports that reveal new data, the story about the fight to the top is just getting started but Disney vs Netflix has acquired the spotlight lately.
Recent turn of events
Disney+ recently added around 14 million new subscribers during the third fiscal quarter resulting in a total of 152 million subscribers on the platform. But if we factor in the remaining 2 streaming services of Disney i.e. Hulu and ESPN+, the subscriber base turns out to be 221 million.
This latest news came in August 2022, and spread like a wildfire. With Walt Disney dominating over Netflix in terms of subscribers by 1 million, we ran a simple analysis and came up with the 3 most dominant reasons why Disney is giving a tough time to Netflix.
3 Factors that are working in favor of Disney
Segregated Offerings
Walt Disney owns 3 streaming platforms: Disney+, Hulu and ESPN+.
The content owned by Disney is intelligently distributed across these 3 platforms as per their segregated audience. This strategy has been remarkably successful.
Bob Iger, CEO, Disney, said in a recent interview:
“What we said when we decided to launch ESPN+ and Disney+ is that rather than creating one gigantic fat bundle of sports, general entertainment programming and family programming, we thought we’d serve the consumer better by segregating all three.”
Bob Iger, CEO, Disney
Here’s how the Disney offerings are segregated:
Disney+
Home for Disney, Pixar, Star Wars, and Marvel is essentially targeted towards catering to a young audience, significantly below 18 year old. Promised to be cheaper than Netflix in the beginning, Disney+ is going strong with its original shows and continuously expanding content library, all thanks to spinoffs of pre-established cult franchises.
Hulu
Along with an unmatched library of original content that caters to the adult audience, Hulu also contains a live TV and On-Demand channel service. Pricing is divided into 2 tiers, one is a cheaper ad-supported subscription plan whereas the second one is a premium ad-free subscription.
ESPN+
Launched in April 2018, includes MLB, NHL, F1 and other international sports events streamed live on the platform.
Cheaper Pricing
Disney+ has significantly cheaper plans compared to Netflix. Meanwhile, Netflix recently made a few announcements like crackdown on account sharing, subscription price increase and introducing ads in the lower price tiers, which did not sit well with the existing subscribers. This led to a steep subscriber decline in the latest quarter.
The Entertainment Business Expertise
An entertainment company essentially needs to be good at the following 2 aspects:
- Telling stories
- Monetizing the content
Disney is the market leader in all three of these aspects of the entertainment business.
Telling stories
Disney owns many of the cult franchises like Marvel Entertainment and Lucas Films. This gives Disney access to one of the most popular characters throughout the history of cinema. Disney has done justice to the characters via quality storytelling. To put this in context, you can see how well Marvel treated the characters compared to how Fox and Sony executed them. IP has its own place but bringing justice to those characters is another thing.
Monetizing the content
Disney has successfully leveraged the existing fan following by introducing a wide range of merchandise products for its fan following like clothing, character-specific merch, and toys. Disney made $56.2B in retail sales of licensed products in 2021. This made Disney the TOP licensor in the entire world in 2021. Furthermore, Disney’s popular theme park experience which is considered among “places you should visit before you die” is a major cash cow.
The Unispade Take
Despite the current trend of Disney overtaking Netflix, there is a lot yet to be seen in the streaming wars. This dominance can’t be maintained at such cheap prices. Disney is inevitably going to increase the prices of its streaming packages because it costs a lot to produce quality shows at a massive scale. This increase will be seen in both, the ad-free tier and the cheaper ad-supported tiers.
According to Digital TV Research, “Three platforms will control nearly half the world’s SVOD subscriptions by 2026” This statement is especially interesting because there are 2 more streaming platforms that are fighting their way towards more subscribers – AppleTV+ and Prime Video.
At present, Netflix, Disney, and HBO are the top 3 contenders in the streaming business and all of them are coming up with new content + new features to woo subscribers. Amidst this, these companies are losing massive money to become profitable and experimenting with different forms of advertising embedded seamlessly in the content.
