Dec 08, 2020 16:04:00

What are the problems Disney faces despite the rapid growth of Disney +?

Disney +, a streaming service launched by Disney in November 2019, has become so popular that the

number of registered users exceeded 10 million on the first day of the service , and sales are increasing more than expected as of 2020. Disney +, already a competitor to Netflix and Amazon Prime Video, has had enough impact to cause a streaming-centric business restructuring within Disney, but the Financial Times reports that this strategy is in trouble. ..

Disney faces digital dilemma despite streaming success | Financial Times
https://www.ft.com/content/cf22ac6b-c065-4657-bbe6-6689c625461d

Disney Considered Moving Major Sports Rights to ESPN +, Selling A & E & Freeform – The Streamable
https://thestreamable.com/news/disney-considered-moving-major-sports-rights-to-espn-plus-selling-ae-freeform

Will Disney + Kill the Hulu Star?
https://wccftech.com/will-disney-kill-the-hulu-star/

At the beginning of the Disney + deployment strategy, Walt Disney Company CEO Bob Eiger and executive Kevin Mayer had the view that adding Hulu to Disney + could increase their market share. .. However, at that time Disney was already running ESPN + for live streaming of sports broadcasts, and if Hulu and Disney + were merged, only ESPN + would be left behind. So Disney has launched a service called Disney Bundle, which allows you to watch Disney +, Hulu, and ESPN + for 1,400 yen per month.

Disney announces a service that allows you to watch three streaming services at once for 1400 yen per month --GIGAZINE

This strategy has helped ESPN + gain more viewers than ever before. ESPN + announced that it had 10.3 million subscribers in its fourth-quarter earnings report in November 2020, which is significant given that it had 7.9 million in the second quarter. It's a leap. For this reason, in 2022, it is also being considered to shift some of the popular sports programs from the sports channel ESPN to streaming services.

On the other hand, many companies are competing for the rights to live sports, and prices are on the rise. For this reason, if all rights are transferred to ESPN +, the cost of the streaming department will increase and the service price will have to be $ 40 to $ 45 per month (about 4200 to 4700 yen), but the average service subscription It is said that the price a person pays for one channel is $ 4.5 (about 500 yen). It is said that this point stands out as a problem.

In addition, Disney + already has more than 70 million subscribers, but Hulu and others are facing sluggish growth, and it is said that there is a debate about whether to combine multiple streaming services into one. One service has more than 120 million subscribers, but there are risks.

In addition, Disney + has surpassed initial expectations, but is still in the red for Disney. Disney reports that cable channel operating profit in 2020 will be $ 6 billion, but this amount is less than usual due to the shift to streaming services with low profitability. It is said that Disney had planned to sell

A + E Networks in order to monetize it with streaming services, but for unknown reasons, it did not come true.

Disney's move to streaming is in line with investor expectations and stock prices are on the rise, but for media that have been profitable on existing TV channels, streaming will still be profitable. It's a difficult task. (PDF file) According to a Dataxis report , the average revenue per user (ARPU) of streaming services is not expected to exceed $ 15 by 2024. On the other hand, the ARPU of pay-TV subscribers is over $ 100.

Since Disney + can be expected to have a network effect and there is no need to negotiate content distribution, it is expected that it will eventually increase profitability, but it is expected that there will be a long way to go. ..