Disney+, the streaming service of The Walt Disney Company (NYSE), reached the 50 million subscriber level last week. Disney had predicted it would not hit that level until 2023. What experts cannot say is whether the rapid rise will harm larger rivals Amazon.com Inc (NASDAQ: AMZN) and Netflix, Inc. (NASDAQ: NFLX). It will not be evident until those two companies report earnings. To compound any forecast of a competitive landscape, it is too early to tell how many of the Disney subscribers will stay with the service.
Most theories about the relative success of streaming services are based on how many of them people will pay for at once. At some point, consumers have more programs than they can watch. Some research puts the median number of streaming services per household at about three.
And, there is the issue of expense. Disney+ carries a subscription price of $6.99 a month. Netflix’s Standard plan is $12.99 a month. Amazon’s is $12.99 a month. However, it is part of Amazon’s Prime subscription, which includes exclusive deals on Amazon products and free shipping, among other benefits. To subscribe to all three carries a price of close to $33 a month.
Netflix has over 155 million subscribers worldwide. Amazon does not release a figure, but it is estimated to be above 100 million. There are several smaller services, which include Hulu, CBS All Access, and HBO Now.
Netflix and Amazon produce vast amounts of original content to draw and keep subscribers. Each invests well into the hundreds of millions of dollars a year. Neither company releases hard numbers of whether this works as a way to cut “churn,” which is how many people drop out of the service in any given quarter.
Disney+has an appeal which is not based as much on original content. Its foundation is a massive library of highly popular programs. Disney owns Disney movies, Pixar, Marvel, and Star Wars. Some of its films are among the most popular of all time based on box office success. The Star Wars and Avengers films have brought in billions of dollars from traditional theater tickets.
As the pandemic keeps people indoors, it may be they will pay for more services than they have in the past. As people begin to leave their homes again, they may start to cancel. And, no one knows which services will be abandoned.
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