Disney+ added 7.9 million subscribers in the most recent quarter, growing the total number of subscribers to 138 million worldwide. Disney Plus now has 7.1 million more subscribers in the US and Canada than it did a year ago, with a total of 44.4 million.[i]
The company also said that the number of subscribers for all of its streaming offerings — including Hulu and ESPN Plus — had grown to over 205 million, an increase from the 196.4 million it reported in January. This comes as welcome news for an industry bracing for a slowdown, with Netflix recently announcing a drop in subscribers for the first time since its inception.
Interestingly, this growth comes alongside a billion dollars loss in revenue to end a customer’s license agreement for film and television content early to use the content on its own streaming services. The release of films like Pixar’s “Turning Red” helped Disney+ attract subscribers in the first quarter, which ended in March. Disney+ has understandably been a hit with families with young kids. However, Disney’s CEO noted that 50% of Disney+ subscribers now are families without kids. He added that the streaming service will continue to strive for a broader audience and recognizes Disney’s “unique ability to attract viewers from a range of demographic groups.”
Collectively across all of its media properties, Disney is likely to spend US$24 billion on content and sports media rights.[ii] The journey of two-time MVP Giannis Antetokounmpo and his brothers from difficult upbringings in Greece to National Basketball Association champions is the subject of an upcoming film titled “Rise” that will debut in June as part of Disney’s strategy to develop content at the confluence of popular live sports such as the basketball league. Disney’s focus on genre fans and programming makes Disney+ 30% more valuable than average streaming services, according to Fandom’s “State of Streaming” report.[iii] According to Fandom’s survey, the content genre is the primary differentiating trait for 62% of respondents making choices of what subscription video-on-demand service to sign up for, with Disney+ leading the pack. Because of those genre offerings, Disney+ was estimated to have a 30% higher value than an average video streaming service. The top franchises and brands in terms of how they cater to fans beyond screen content are Star Wars, Disney, Harry Potter, and Marvel. Such is their allegiance to those major brands that 73% of respondents said their spending would be worth it for any service offering exclusive access to behind-the-scenes content or merchandise and collectibles.
Disney+ is now set to expand to 42 additional countries and 11 territories across Europe, West Asia, and Africa.[iv] The rollout will start on May 18 in South Africa. And Disney is slated to have a strong push for multiple pricing tiers with the ad-supported service as the flagship tier to drive user growth in price-sensitive emerging markets in Asia and Africa.
With Netflix announcing an ad-supported tier coming by late 2022, we expect intense competition in these new markets for user acquisition. Disney+ will rely on its unique content prowess with new reality shows like ‘The Quest.’ Teenaged participants playacting as “paladins” will compete for various challenges in a fictional medieval world filled with magic and conflict. Disney+ has been relatively slow on live sports features on the platform, given the linear television and cable rights agreements Disney currently has for ESPN in most markets.
With more content choices available to consumers than ever, services will have to be creative in avoiding subscription fatigue from setting in among consumers. Partnerships with mobile carriers to bundle video streaming subscriptions with 5G mobile tariffs will be a crucial driver of user growth. These partnerships also allow streaming services to test different pricing tiers with the various consumer segments. For example, a lower-priced ad-supported tier could be made available with a pre-paid data plan, while the ad-free tier could be offered to the higher ARPU generating post-paid users.