Disney’s streaming service, Disney+, has shifted the power dynamic in online media, and former innovation partners Disney and Netflix are now competitors. The contours of their new relationship have been intriguing to watch, as these two giants battle for customer screen time, wallets, and loyalty.
For years Disney made hundreds of millions of dollars from content on Netflix and it hinted for nearly two years that this move was coming. Its competitive service is priced about half of what Netflix charges, even with Netflix’s move to lower-cost options.
Powerful assets and synergies
Disney’s catalog is a formidable challenger. In addition to the countless Disney classic movies are the award-winning Pixar films, the Marvel and Star Wars franchises, and National Geographic shows. There are also synergies with ESPN and ABC, which Disney owns, along with the 20th Century Fox holdings it absorbed earlier this year. An estimated 500 movies and 7500 television shows are available, including the first 30 seasons of the fan favorite, the Simpsons.
What innovations is Disney bringing to the customer experience? In addition to competitive monthly pricing, Disney offers a discounted year-long subscription for $80, locking in subscribers and boosting cash flow. Plus, we can expect some creative tie-ins from its theme parks and other parts of the Disney-verse. Disney doesn’t want customers to completely abandon cable (or at least ABC) but it is also hedging its bets on a future when customers buy multiple viewing packages — or bundles like their Disney+, Hulu, and ESPN package.
Either or And?
Don’t count Netflix out, of course. They have demonstrated their innovative agility in the past by pioneering the move to streaming and strong leadership in original programming.
What both companies are counting on is that customers will find their offering compelling — but perhaps not at the expense of the other. Netflix has more than 200 million subscribers, and more than half are outside of the United States and Canada. Similarly, Disney is a global brand stretching across multiple media outlets. From its debut in November 2019, the service reaches more than 150 million subscribers.
Both companies will need to remain nimble to respond to cultural trends, as well as additional competition from Amazon, Apple, and AT&T. The battle will be a showcase for which company can fuse creative output with engineering talent and disciplined execution. It will play out in our living rooms and on our laptops, tablets, phones, and whatever new devices emerge in the next few years.
Your challenge this week: If a key partner became a competitor, what capabilities would you call upon to rise to the challenge?