It was no surprise at all this week when Disney announced that Disney+ now has over 100 million global subscribers. A few weeks ago, I wrote about the possibility the platform would crack that magic number in time for last month’s earnings report, and when Disney instead said then it was “only” up to 95 million, most analysts figured it was just a matter of weeks before the milestone was reached. Still, even if the actual news is a bit anticlimactic, the accomplishment is no less impressive. Hell, it’s actually pretty stunning.
What’s so wow-worthy here isn’t that Disney+ has ended up a winner. Nobody with common sense thought it would fail, particularly after company execs outlined the specifics of their plans to investors back in April 2019. But the speed with which the Mouse House has been able to convince so many households to sign up for Disney+ still blows me away. Consider: Hulu is a great service, but before Disney took full control in 2019, it was still in only around 25 million U.S. homes — even though it’s been around for more than a decade and had backing from every major broadcast network other than CBS. Disney+ was able to snag twice as many subs — 50 million — within five months of its launch, even with a slightly higher price tag and a more limited overall offering. Why Hulu never got as big as it should have is the subject for a whole other newsletter, but I think there are few key reasons Disney was able to supersize its streaming service so speedily:
➽ Focusing on franchises and family entertainment instead of serving up another all-you-can-eat buffet of content from every genre in the universe turned out to be a brilliant move. Prior to launch, I wondered whether Disney+ was limiting its upside with its emphasis on G and PG-rated TV shows and movies. After all, not everyone has kids or cares deeply about the Marvel Cinematic Universe, and in theory, it seemed a service stuffed with just that could start to feel a bit less essential at some point. Turns out, though, being a bit different than the other major streamers was a selling point for Disney+ and may have even helped it stand out. Consider: At least for the foreseeable future, every mass appeal general entertainment service that isn’t Netflix is always going to have to settle for being runner-up to the Death Star of streamers. But by limiting itself to Disney-branded (or Disney-style) programming, Disney+ is assured of owning its category. That has proven to be a powerful offer to consumers around the globe.
➽ Debuting just a handful of tentpole shows early on was a feature, not a bug. Netflix probably debuts more new originals in a busy week than Disney+ has rolled out over its entire first 16 months, particularly if you leave out the latter’s unscripted offerings (most of which are just infomercials for other parts of the Magic Kingdom). But once again, less was more: Because it wasn’t throwing out a new project every week or two, the genius Marketeers at Disney+ could focus on turning almost every one of them into an event. Some of this was by accident, since the pandemic delayed production on a few titles originally planned for 2020. But even if the world had not stopped last March, year one of Disney+ was never going to be overflowing with big-budget blockbuster originals.
The company clearly made the call that it needed to let its new shows breathe so that they felt special — and not just the latest widget to come off the #content assembly line. That’s also why it makes so much sense for Disney+ to release new episodes of its big shows every week, rather than burning off an entire season in a weekend: Audiences have time to parse and debate every plot twist in a given chapter of a show’s season, both online and around the family couch, without having to worry about someone else already rushing to the end of the story. Given how deeply audiences have invested in The Mandalorian and now Wandavision, I think the less-is-more strategy has been a smashing success. That said, it’ll be interesting to see what happens when the dozens of planned spinoffs and brand extensions of Disney properties start coming online late this year and into 2022. Will the magical worlds of Marvel and Star Wars seem quite so magical when a new series pops up every other week?
➽ The coronavirus lockdowns and movement restrictions almost surely help speed sign-ups to the service. Remember Quibi? It failed in part because it was a mobile-first product at a time when folks were no longer, well… mobile. By contrast, Disney+ benefited from being a family-forward platform just as billions of consumers were suddenly stuck at home with their families, searching for new ways to entertain themselves. While tens of millions had incomes displaced by the pandemic, there were even more still-employed consumers — both in the U.S. and around the globe — who could no longer go to movies or concerts or plays. These folks found themselves with a bit more disposable income, and Disney+ offered a year of feel-good entertainment for not much more than what a family of four might otherwise spend on a night out at the multiplex. It also didn’t hurt that the streamer acted quickly to meet this new demand by moving the premieres of Hamilton and Pixar’s Soul from theaters to Disney+ or having Frozen II debut on subscription TV much earlier than planned.
All the success Disney+ has had in its first 16 months doesn’t mean it won’t still face some bumps as it races to maintain its momentum. In just a few weeks, it will begin charging U.S. consumers $7.99 per month, up a dollar from the current fee. Netflix generally hasn’t been hurt by its regular price hikes, so I expect Disney+ won’t suffer a wave of cancellations either, particularly given its relatively low cost. Still, as the good news on the vaccination front pushes more folks back into public spaces, and kids head back to school — lessening the need for the electronic babysitter that is Disney+ — it is not inconceivable that Disney+’s rate of growth starts to slow down just a tick. Expect an even bigger effort from Disney to push folks into its bigger streaming bundle, which combines Disney+ with ESPN+ and Hulu for a nice discount. This week, Hulu started integrating ESPN+ content directly into its app, and I wouldn’t at all be surprised if Disney eventually lets consumers stream all three platforms via one app. It’s already doing so in other parts of the world, where it has integrated Hulu content (under the brand name Star) together with Disney+ and layered in added parental controls.
There’s also the issue of how much profit the Mouse House is making off of each Disney+ subscriber: In big parts of Asia, the service is sold at a deeply discounted price equal to just a couple dollars. Roughly 30 percent of the platform’s 100 million subscriptions are billed at the cheaper price, which means Disney+ revenue isn’t quite as rosy as its overall numbers might suggest. Its expenses are also going to explode as those dozens of big-budget series the streamer announced in December begin production.
But these possible hiccups shouldn’t obscure the bigger picture: Disney+ is a smashing success whose long-term future now seems all but assured. The only question now: How quickly can it get to 200 million subscribers?
Roku Tries to Crack the Original Programming Code
We already suspected Roku was getting into the original-series game when it struck a deal to license the Quibi library for its free-content service, the Roku Channel. Now there’s more proof: The company says it has snagged U.S. and Canadian rights to Cypher, an action-thriller from music-video producer Zeus Zamani and writer-director Majdi Smiri. The independently produced series debuted on Netflix South Africa last year; all seven hour-long episodes of the show will drop on the ad-supported Roku Channel March 19. (You can check out a 2019 trailer for the show here, or an updated one made by Roku here.)
Between the Quibi agreement and today’s news, Roku Channel’s strategy for originals seems to becoming clear: Rather than soak tens of millions into developing and producing shows it owns, the company appears to be looking to acquire already finished (or at least mostly financed) programming that can be sold as new to North American audiences. This approach is actually fairly standard in linear TV. The CW, for example, regularly licenses unscripted shows from the United Kingdom for its summer lineup. And every so often broadcast networks in the U.S. have been open to plopping Canadian series on to their lineups, from Due South to the more recent NBC addition Nurses.
While Roku Channel is now available in over 60 million homes, Roku doesn’t seem interested in deficit financing big, splashy projects in order to compete with the Netflixes and Hulus of the world, or even Amazon-owned IMDb TV, another free streamer. Rather, its early moves in the originals space suggests it wants content which can be bought at a reasonable price and can be paid for throughout whatever added revenue the exclusive content can bring in. Perhaps that changes if and when Roku Channel scales up and attracts more monthly users, but for now, this seems like a smart way to see how much first-run fare can move the needle on an ad-supported video-on-demand platform.
