Disney Plus, owned by Walt Disney Company, is one of the leading streaming platforms today. Although the platform was launched just 4 years ago, it comes in second place, after Netflix, in global subscribers count. Although Disney Plus' quick growth seems like a success story, it is not a fairytale around Disney Plus HQ. In the last quarter Disney Plus lost 4 million subscribers, following the trend with 2.4 subscribers lost in Q1 2023. The platform is receiving backlash from users with increased prices and lost partnerships. With the recent downfall of Disney Plus, let’s take a look at where the platform stands in “streaming wars”.
Disney Plus’s Strong Entrance
Disney Plus is a fairly new platform compared to rivals Netflix and Amazon Prime. The platform was launched on November 12th, 2019, first in the US, Canada and the Netherlands. One week later, the platform reached users in Australia, New Zealand and Puerto Rico. The platform reached 50 million paid subscribers worldwide in its first 5 months, making a powerful entrance to the “streaming wars”. This fast growth was no surprise, with the wide-range library Disney Plus offers to users. Disney Plus’s library includes original content such as the “Star Wars” series, all the “Marvel” movies, original content from “Disney Channel” and “The Mandalorian”.
Disney Plus’ exclusive content is thanks to the acquisitions Walt Disney Company had. The Walt Disney Company has ownership over many media platforms such as Disney Channel, ESPN, FX, and National Geographic and also digital platforms Disney+, ESPN+, Hulu, and Hotstar. Lastly, the acquisition of 21st Century Fox in March 2019 gave a big advantage to Disney Plus. Thus, the users are not only able to access the range of movies and tv shows from 21st Century Fox, but also the content from National Geographic library.
Along with its exclusive library the price at launch was fairly cheap. At the time of launch Disney+ set the price of $6.99/month for U.S users. This price was cheaper than Netflix and HBO, giving Disney Plus an enormous market advantage. Thus, after its launch in November 2019, Disney Plus made a successful start, and this success continued as the platform started launching worldwide.
In 2020, The Disney Plus got a big boost when it launched in eight Western European countries: the U.K., Ireland, Germany, Italy, Spain, Austria, France and Switzerland. In addition, Disney Plus launched on April 3rd in India, in conjunction with the existing Hotstar service, a media service featuring domestic Indian film, television and sport content. With this launch, India accounted for approximately 8 million of Disney Plus’ 50 million subscribers in April 2020. The pandemic was another contributor to Disney Plus’s rise in 2020. Through the course of 2021 this increase continued. Subscriber count surpassed 100 million by April 2021, as its Marvel original shows “WandaVision” and “The Falcon and the Winter Soldier” premiered. In summer of 2022, the platform launched across Europe, Africa and West Asia in 42 countries and 11 new territories, including South Africa, Turkey, Poland and the United Arab Emirates. As the platform grew world-wide, the subscriber count reached 164.2 million by the end of 2022.
Beginning of the Downfall
While from an outside perspective everything seemed fine, with growing subscribers, new shows and availability in more and more countries, Disney Plus was not content with the revenues. Although spreading to more countries may mean more subscribers, it does not necessarily mean more revenue for the company. In the 4th quarter of 2022, the company lost 1.5 billion dollars, despite the increase in subscribers. This decrease was partly due to the platform’s lower-priced services in some countries like India and East Europe than in the U.S. In August, Disney Plus announced that the Disney+ premium tier, without ads, will be increased by $3 to $11 per month starting December 2022. A new plan was introduced as well: subscriptions with ads cost $8 a month from December. That price point is what consumers were paying for Disney+ without the ads. After the price increase, Bob Chapek, Disney’s CEO (2020-2022), said in a letter that “We expect our operating losses to narrow going forward.” He added that the company aims that the streaming unit will “achieve profitability in fiscal 2024.”
After the price increase in December 2022, a downfall was inevitable. In the first quarter of 2023, Disney Plus lost 2.4 million subscribers, losing 300,000 customers only in the US and Canada, after raising subscription prices in December. Trend continues with 4 million subscribers lost in the second quarter, falling to nearly 158 million subscribers. However, the subscriber loss was not solely due to price increases. Most of the lost subscribers came from Disney+ Hotstar, Disney Plus - Hotstar platform in India With both streaming and sports content. In India the company lost streaming rights to Indian Premier League cricket matches, leading to a net loss of 2.4 million in the previous three months.
What's Next For Disney Plus
Despite the subscriber decrease, the company’s price increases worked in favor of them as they reduced the operating losses to $659m (£523m), from $1.1bn a year earlier. Now, Disney Plus’s goal is to continue maximizing their revenues . Bob Iger (the new CEO of Disney Plus) announced in February, that Disney is eliminating 7,000 jobs, with layoffs affecting 3.2% of its global workforce. He added that the layoffs are part of a strategy to reduce costs by $5.5 billion. In this quarter, the company expects to make even more savings. All in all, despite the subscribers loss, the company stays optimistic towards the future and aims to increase revenues.
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