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The D2C business model has taken almost every industry by storm (e.g. beauty, mobile services, finance, etc.), rapidly changing the way companies operate, market and sell products. Today it’s a mainstream strategy that is being used by corporations around the world to reduce costs, cut out the middle-man and take direct control of their branding, marketing and sales.
The entertainment industry has been no exception to the trend, with D2C streaming platforms like Netflix and Amazon’s Prime Video dominating the scene. The past year took things to the next level with a handful of corporate giants making their own entrances to the arena (marking the start of what many refer to as the streaming wars):
None have seen the rapid growth and success of this week’s corporate startup, Disney’s Disney+. Let’s take a look at some of the factors that make Disney+ an early favourite with so many viewers.
How it all started.
The last few years have shown a marked decrease in demand for cable tv offerings in favour of video streaming subscriptions, especially among younger viewers. Tony Vinciquerra, the chairman and CEO of Sony Pictures Entertainment, compares the disruption in the industry to the 1980s cable boom:
“There’s massive change happening right now at every level, but this time around, the combatants have deeper pockets, and the playing field is far more cutthroat than it was.”
It’s therefore not surprising that in 2019, media and entertainment companies spent over $120 billion on original content.
With the industry changing so rapidly, and so much great viewer content in their hands, starting a new D2C streaming platform was on Disney’s radar for some time. It was a genius way to leverage their assets (e.g. brand awareness, existing content) to drive growth and gain viewers. In 2019, alone, they invested:
- $ 27,8 billion in original content
- $ 71 billion to acquire 21st Century Fox
This last purchase included Fox film and TV studios, the FX networks, National Geographic and the Giant Star from India. As described by Robert Iger, chairman of the Walt Disney Company:
“Combining Disney’s and 21st Century Fox’s wealth of creative content and proven talent creates the pre-eminent global entertainment company, well-positioned to lead in an incredibly dynamic and transformative era.”
It was with this sizable wealth of unique content that Disney made its entrance into the world of D2C video streaming.
Meet Disney+.
Disney+ is an ad-free video streaming service with a rich library of content from Disney, Pixar, Marvel, Star Wars, National Geographic, and 20th Century Fox. At the time of its launch, the service went live in the U.S., Canada and the Netherlands with over 500 films and 7,500 episodes that included Disney+ original content (e.g. The Mandalorian).
Initial growth goals for the company included a target of 60 to 90 million subscribers by 2024, with reality surpassing everyone’s expectations:
- 10 million subscribers on day 1.
- 28 million subscribers 3 months after launch (it took Netflix 5 years to get there).
- Over 73,7 million subscribers today.
Although Disney+ still has a smaller paying customer base than Netflix with 193 million subscribers, there’s every reason to think it could be a real contender in the future. According to an article by Wired, it could reach 3rd place in the industry by 2025:
- 1st place – Netflix with a projected 235,6 million subscribers.
- 2nd place – Amazon with a projected 135,9 million subscribers.
- 3rd place – Disney+ with a projected 101,2 million subscribers.
With the pandemic taking its toll on other Disney revenue streams (e.g. movie theatres, theme parks, cruises etc.) the success of this newest D2C venture has been a welcome gift for the group.
How it works.
Viewers can subscribe to Disney+ via the website at DisneyPlus.com and choose between paying yearly or monthly for their services. There’s also an option for a bundle package that combines Disney+, Hulu and ESPN Plus. Pricing varies from country to country with the cost of subscription in the U.S. ranging from:
- $6,99 a month or $69,99 a year
- $12,99 a month for the bundle service.
The service works a lot like Netflix allowing users to share their passwords and stream content on multiple devices simultaneously.
And in true D2C form, the service is also highly customised with each Disney+ account supporting up to 7 individual profiles with personalised recommendations and unique watchlists.
The Disney advantage.
Knowing how to leverage corporate assets is key to the success of any corporate startup, and Disney executed that part brilliantly. Here are just a few of the factors that give Disney+ a competitive edge:
A wide reach.
Disney has a large customer base, and they know how to market to them. They leveraged both their broad reach and marketing know-how to make sure everyone was aware of the new service. Their efforts paid-off with Disney+ making its debut with the biggest streaming launch on record.
Industry know-how.
Disney has been a leader in the entertainment business for years, specifically catering to a kid and family-friendly audience. They used their knowledge of what the industry craves to increase viewership with content like “The Mandalorian” and “Hamilton” (the most streamed movie in 2020).
Recyclable Content.
When you look at some of the top 10 movies and shows playing on Netflix or Prime Video the list is often a mix of both old and new content. In the case of Disney+, both “The Mandalorian” and “The Simpsons” have a high number of viewers. This would suggest that older content with a nostalgia value is a plus factor for many viewers – and who has a better library of high-quality recyclable content than Disney (e.g. The Little Mermaid, Star Wars, Mickey Mouse Cartoons).
Funding and resources.
Content from Disney Studios, Pixar, Star Wars and Marvel is one thing but adding 21 Century Fox content to the mix put things on a different level. It took funding to make the purchases, talent to know what moves to make, and networks to make deals happen. Think about how Disney+ would stack up to a much scrappier and less recognised Netflix if they had started out together – would Netflix still have the position it enjoys today?
What’s next?
Today Disney+ is available in over 20 countries, with some of the latest additions including Portugal, Scandinavia, Belgium, Luxembourg and most recently Latin America.
Disney is currently in the middle of a strategic reorganisation of its media and entertainment businesses. Following the success of Disney+, they’ve decided to focus on producing more D2C content and making streaming services more central to their overall strategy. As described by recently appointed CEO Bob Chapek:
“Given the incredible success of Disney+ and our plans to accelerate our direct-to-consumer business, we are strategically positioning our company to more effectively support our growth strategy and increase shareholder value.”
There’s even talk of a new streaming platform to be launched globally in 2021. The new platform “Star”, will include content from ABC, FOX and Searchlight among others. The move is likely to bring some exciting changes for the company and great new content for audiences around the world.
Are you interested in creating new concepts with business models like Disney? Get in touch!
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