Media

Disney's Streaming Business Is In Trouble

Bastiaan Slabbers / iStock Unreleased via Getty Images

CEO Bob Iger launched Disney’s big bet on streaming in November 2019. The product, which was called Disney+, grew so rapidly that the company put out press release after press release until subscribers hit 100 million. Over the course of the same period. Bob Chapek replaced Iger. His tenure did not last long. Iger returned, partly because of losses at Disney’s streaming division.

Iger should have taken some of the blame for the Disney+ failure. He priced the service at $6.99 a month, well below market leaders Netflix and Amazon. His grab at market share cost Disney billions of dollars in losses. Today, Disney struggles to get Disney+ profitable. After several price increases, the monthly fee for an ad-free version is $13.99 a month.

Disney+ began to lose subscribers recently. In the last reported quarter, the number was $157.8 million, well below Wall St.’s estimates.

Disney+ is not the only reason for Disney’s challenges. Anecdotally, traffic to its theme parks has dropped because of high prices. Certain legacy businesses like ABC are under siege financially. That problem is not unique to Disney.

There are rumors Disney will sell ABC and some other networks to media billionaire Byron Allen for as much as $10 billion. Disney has denied a deal is pending, but some stories in the media disagree.

Bloomberg reports that Disney+ will not come near the 215 million to 245 million subscriber count that Iger set in August last year. It has added to the question of why the board of directors was so anxious to bring him back.

Iger’s decision to raise Disney+ rates could cause subscribers to drop the service. Among the other threats to the service are a small army of other streaming services, particularly Netflix and Amazon. Consumer research shows that households may pay for three or four services. It is not clear that Disney is usually on that list.

Disney’s streaming plans have been ruined and may not go away.

 

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.