Disney Plus' first 15 months on the streaming market featured a fairy-tale narrative, with the streaming service surpassing 100 million subscribers globally by March.
Disney CEO Bob Chapek said the "enormous success" of the streaming service "has inspired us to be even more ambitious, and to significantly increase our investment in the development of high-quality content."
But momentum can change quickly.
The subscription service's once incendiary subscriber growth has slowed significantly, particularly in North America, according to company data obtained by The Information.
Quoting "two people with knowledge of the internal data," the news site said that Disney Plus finished its fiscal third quarter on July 3 with 110 million subscribers globally. That's up from the 103.6 million worldwide figure Disney announced at the end of its fiscal second quarter, which closed April 3.
Most of the growth has come in India and Latin American markets. Since the end of Disney's fiscal first quarter on Feb. 3 through July 3, Disney Plus has only seen its subscriber ranks grow from 37 million to 38 million users.
While Disney Plus' next 100 million subscribers could be a lot harder to get than its first 100 million, none of this is meant to imply that the platform's business model is flawed.
The incendiary premiere of Marvel film Black Widow on July 9 revealed the awesome power of the SVOD service, with around 2 million Disney Plus subscribers paying an additional $30 to see the movie at home instead of in theaters, generating an additional $60 million for Disney on top of global box office receipts exceeding $158 million.
According to one former studio executive turned consultant, since Disney doesn't have to share a portion of that $60 million with theater owners, that's like making an additional $120 million at the box office.
That figure, though, doesn't include the millions it paid to Black Widow star Scarlett Johansson, who sued Disney for $50 million over its day and date release of the movie.
Part of the Plan All Along
The initial big subscriber numbers are thanks in part to years of planning.
The Disney Plus slate is the result of a well-executed acquisition strategy that began in 2004 with the purchase of the Muppets, then Pixar in 2006, before picking up more speed with the addition of Lucasfilm, National Geographic Marvel and Fox. It all came to fruition with the advent of Disney Plus.
Former Disney CEO Bob Iger credited Disney Plus’ strong debut to the parent company’s big investments in IP. “We feel that validates that collection of brands and a blend of product,” he said.
And content-wise, Disney Plus seems to offer something for everyone: kids, teens, adults, men and women. “We are seeing the four-quadrant appeal of our brands reflected in our subscriber numbers,” Iger noted.
Combine that with a sleek Disney Plus app and the marketing power of its parent company, and Disney Plus is already achieving Disney’s broader goal—that is, compete with Netflix globally for next-generation video consumers.
Can the growth be sustained? There are skeptics. Equity research firm Needham & Company, for example, has expressed doubt about Disney’s growth projections for Disney Plus. And there’s new streaming competition for Disney Plus, with the launches of AT&T’s HBO Max, Comcast/NBCUniversal’s Peacock, ViacomCBS's Paramount Plus and Discovery Inc.'s Discovery Plus, not to mention the merger of WarnerMedia and Discovery.
Like its media conglomerate peers, Disney--now under the leadership of Bob Chapek--has already doubled down on its streaming bet, unleashing a brutal restructuring in the months before the pandemic set in, prioritizing subscription OTT.
As we watch what happens next with the most exciting new OTT platform to emerge in years, here are four things to keep an eye on:
Disney Plus upped its price for the first time in March. Bumping the monthly cost from $6.99 to $7.99 and the yearly commitment from $69.99 to $79.99, after a seven-day free trial. The price for Disney Plus's bundle with Hulu and ESPN Plus also went up $1 to $13.99 a month.
A solo subscription to Hulu goes for $5.99 a month. ESPN Plus is 4.99. The individual prices of those services added together comes to $17.99. Thus, bundling saves subscribers $5 a month, a 28% discount. Put another way, after the subscription prices for Hulu and ESPN Plus are taken into account, bundling subscribers are getting Disney Plus for $1.
Consumers can also get a free year of Disney Plus by signing up with Verizon. Netflix, the SVOD service Disney Plus is seeking to catch up to—or merely slow down—charges $12.99 for its most popular tier, the HD version that allows two concurrent streams in the home.
That means Disney Plus is nearly half the price of Netflix. In an era of ever-escalating programming costs, how long can Disney Plus afford to keep its price point so low?
Disney's Broad Appeal
A big part of Disney Plus’s early success has been its “four-quadrant” appeal—its ability to bring in all major audience demographics. Most major streamers depend on kids’ fare to keep parents paying up.
And Disney Plus has the most robust kids offering in the streaming biz, from Disney shows like Hannah Montana to Disney Animation classics including Frozen to Pixar movies like Moana, while also factoring in The Muppets and Nat Geo nature show.
And as the kids age into that all important tween/18-35 demographic, Disney Plus offers even more punch with some of the best of Marvel’s superhero blockbusters and the entire nine-film “Star Wars” saga. For the more musically-inclined, there’s also High School Musical: The Series.
For more mature audiences who are less interested in things that go “bang,” Disney Plus offers classics from the Fox archives and the entire suite if National Geographic programming. Perhaps most importantly, there are hits like “Star Wars”-based series The Mandalorian, which span audience age demo, race and economic brackets.
Sustaining growth will come down to making hits.
The success of The Mandalorian, built on through Season 2, has been parlayed into an aggressive slate of new "Star Wars" shows, virtually all of them still pending amid a slow pandemic-era production schedule.
During Disney’s four-hour-long “Investor Day” presentation on Dec. 10, 2020, the conglomerate announced a slew of new Star Wars shows and films that span timelines, genres and even live-action and animation formats, with producers Jon Favreau and Dave Filoni now serving as guardians of Star Wars canon an architects of its ongoing fate.
Marvel-inspired hits have also driven Disney Plus--not only in the form of theatrical movies like Black Widow, but also the surprise breakout original series WandaVision.
There's also been a Pixar hit--Soul debuted on Christmas Day, outside of the studio's $30 "Premiere Access" window, to boffo viewership numbers and an unrevealed--but no doubt robust--flurry of Disney Plus signups.
Sure there were those famous early technical glitches for Disney Plus, which the company attributed to growing faster out of the gate than it was initially prepared for. But outage reports have been few and far between since those early days.
There was also concern that the Disney Plus North American launch would be undermined by an impasse with Amazon, and that Disney Plus would debut in November with no app support for the No. 2 OTT ecosystem in the U.S., Amazon Fire TV. But that got taken care of, as well.
These days, everyone seems pretty happy with the performance of the Disney Plus app, and it seems to effectively play across the device ecosystem—from Roku to Amazon Fire TV to Apple TV to Android TV; from iOS to Android mobile; and from Xbox to PlayStation. With device ecosystem purveyors like Roku and Amazon gaining more market share and power, while developing their own content agendas, will Disney Plus be able to avoid licensing disputes and sustain a smooth distribution path to its customers?
Iger called international expansion “the next big priority.” Disney Plus launched first in the U.K., Ireland, France, Germany, Spain, Italy, Switzerland and Austria, starting in March.
Shortly thereafter, Disney Plus expanded into another massive market, India. In that country, Disney rebranded its existing Hotstar VIP and Premium subscription tiers to Disney Plus Hotstar.
Currently, Disney Plus is experiencing its fastest growth in India and Latin America.
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