Disney+: Is a Netflix streaming war on the way?
The pandemic’s impact on Disney can be seen through the closing of Disneyland parks, its cruise lines, productions, and delays in its upcoming movies. It has also resulted in thousands of redundancies at Disneyland Resort, Walt Disney World, and its retail stores. For the 2020 fiscal year, Disney reported a net loss of $2.8 billion. Its profits decreased by 99% at $29 million this quarter, from $2.1 billion last year. Its costs will also increase by $1 billion this coming year due to the increased spendings on safety precautionary measures to prevent the spread of the virus as parks are slowly beginning to open again in limited capacity, such as the company’s resort in Florida. Overall, its operating income decreased by 67% to $1.3 billion, and could have been $2.6 billion higher had the effects of the pandemic not hit the company.
Nevertheless, Disney has focused its efforts on its streaming business, Disney+, which uses a subscription model of $7 per month by itself, or $13 a month in conjunction with Hulu and ESPN+ as a package. Disney+ has acquired roughly 95 million subscribers, an increase of 9 million from just December. In fact, the streaming service in conglomeration with Hulu, Hotstar, and ESPN+, has gathered 146 million subscriptions. The company’s fast growth as individuals increasingly indulged in its services during lockdown has solidified its position as a strong Netflix competitor. This positive news of Disney’s progression sent its stock up by 3% in after-hours trading as investors “focused on the promise of streaming instead of the billions of dollars lost to the pandemic.”
The company is now being treated like a tech company as investment in its streaming business continues to rise. However, investors and analysts have raised concerns, wherein they question how the company plans to grow beyond its current “diehard fans.” As a response, Disney plans to invest in and push out more content. Streaming is a very costly business and the company requires high funding to finance new series and movies that are necessary to not only maintain its current subscriber base, but also to lure new subscribers.
Disney’s future looks bright as it harnesses and further develops its Disney+ platform by doubling investment for its annual content to $15 billion by 2024, at which point its streaming business would begin turning over profit.
The company forecasts 300-350 million total subscribers worldwide in its streaming services by the end of 2024. On one hand, Bob Iger, executive chairman, said Disney will focus on releasing quality content over quantity. It plans to release around 100 new titles annually across its brands, with attention to its Disney+ library. Disney has revealed its plans to release 10 Marvel series, 10 Star Wars series, and 15 Disney and Pixar series. On the other hand, as Disney competes with Netflix, there is a pressure to increase its volume of content. Netflix was able to release more than 370 shows and movies last year, which roughly equalled a new show everyday! Kareem Daniel, who is in charge of Disney’s creative content, now says Disney’s goal is to release new content to Disney Plus every week. It will be interesting to watch and analyse the strategy Disney uses to continue flourishing its streaming services this year.