A view of Disney’s latest triumph of surpassing 50 million global subscribers, and challenges ahead.
Did Disney start the Coronavirus? A conspiracy theory that seems to be circulating many households as the soundtrack of Disney’s classic films are heard on repeat across the nation! Of course, they didn’t, but the timing could have not been more perfect. Walt Disney announced late last week that Disney+ has achieved 50 million subscribers worldwide since the service launched 5 months ago in the US, and three weeks ago across most of Western Europe. This is a phenomenal achievement and one that puts the company way ahead of their ambition of 60-90 million subscribers by 2024.
Reaching 50 million subscribers in this time could in fact, give Disney+ the claim of being among the most successful product launches ever. What makes this milestone even more amazing is the fact that Disney+ is still only available in a dozen countries, with Disney yet to launch in some of the most significant and lucrative markets on the planet. Of course, Disney+ still has a smaller subscriber count compared to Netflix (Netflix finished 2019 with 167 million subscribers worldwide), however it is gaining pace – quickly, with its cost (roughly half the price of Netflix), a strong contributing factor in these challenging yet time-rich times.
However, with the streaming unit accounting for less than 10% of its total business there is plenty of work left to be done on Disney’s streaming strategy, whilst the media and entertainment company’s other businesses remain under intense pressure. To put this pressure into perspective, it is estimated that Disney is set to lose $30 million a day, resulting in around $3 billion in revenue loss this year. This is due largely due to 40% of its business being derived from its Theme Parks, which are closed and are likely to remain so until the coronavirus is resolved with a cure or vaccine. Meanwhile, cinemas around the world are also closed, delaying new film releases which represent a significant proportion of immediate revenue. Onward, one of the most anticipated Disney releases of the year, had only two weeks of theatrical release behind it, before being moved to Disney+ to pull additional viewers to the service whilst avoiding millions wasted in marketing to promote the film. This move would have been costly, but one that was essential to avoid the film becoming one of the biggest flops from Disney for some time.
If this wasn’t enough, marketers are largely holding spend on advertising budgets, which are no doubt significantly affecting Disney’s networks. As part of the extended Disney family, ESPN, for one will be suffering, without live sports to broadcast!
With these challenges (not to mention the monumental task of keeping a steady stream of fresh and exclusive content to Disney+ beyond the first heavily discounted year), Bob Iger has taken back control of Disney – weeks after stepping down as CEO. Iger is focused on repositioning Disney to do business differently as it deals with and emerges from the crisis. As 43,000 employees were furloughed last week, and with pay cuts to top execs. Iger, said Disney will likely move forward with less office space and fewer employees. Whilst the road ahead is uncertain for all businesses, it’s worth remembering that Disney made $26 billion in profit last year alone… this should be enough reserves to see Disney weather this unpredictable storm.
Source: New York Times/Deadline, 2020