The force is strong with Disney.
The company is leveraging its movie franchises and original content pipeline to hyperdrive a major strategic shift into the DTC market, as it bets big on Disney Plus and its other streaming platforms, including Hulu and ESPN Plus, in the years ahead.
Subscribers and content jump to hyperspace
In a four-hour Investor Day presentation Thursday, the company announced that it has more than 137 million subscribers across its various streaming platforms and outlined a major strategy that allows it to be “flexible” and “nimble” when it comes to distribution amid the challenges created by the COVID-19 pandemic as well as changes in consumer behaviors across global markets.
A year after its launch, Disney Plus now has 86.8 million subscribers. It expects to take in between 230 million to 260 million subscribers by the end of fiscal 2024, the first year it also projects to achieve profitability. By comparison, Disney said last year it would reach between 60 million and 90 million subscribers by the end of 2024.
(Hulu has more than doubled its subscriber base in just three years, with 38.8 million Hulu subscribers and more than 4 million Hulu Plus Live TV paying subscribers).
Disney is now ramping up content to further accelerate Disney Plus’ growth, and unveiled a trove of more than 100 movies and shows tied to Star Wars, Marvel, FX, Pixar, Disney Animation, National Geographic and more.
Eighty percent of those will hit streaming across Disney-owned platforms, although Disney executive chairman and former CEO Bob Iger and other execs emphasized that the content was about quality productions and not volume, saying it was the most effective way to grow its subscriber base.
Iger said the company has set a target of rolling out more than 100 new titles per year over the next few years, ranging from feature films and shows to documentaries and specials.
With the rollout of new content, Disney announced that it is increasing its Disney Plus subscriptions in the United States by $1 to $7.99 and by 2 euros to 8.99 euros in Europe, with CFO Christine McCarthy saying the company is focused on revenue per user globally.
Advertising at home and abroad
Asked about advertising in the India and Latin America markets, the company said it has no plans for ads on the Disney Plus platform just yet, although ads could be seen in sports on Disney Plus Hotstar in India and Star Plus in Latin America.
“When you look at the Disney Plus product, we have a very high volume of films on our service and we don’t believe that the consumer experience would be a particularly good one if we had advertising on Disney Plus,” McCarthy said. “That doesn’t mean we couldn’t look at some other things related to advertising, but in terms of having advertising in the stream for Disney Plus our intention is not to do that.”
On Hulu’s advertising front, its chief, Kelly Campbell, said that Disney ad sales has made Hulu the “undisputed leader” in streaming TV, with more than 92 million ad supported viewers, which doubled in two years.
She cited Hulu’s focus on automation tools for advertisers large and small that resulted in a rapidly growing programmatic channel and set records with new customers and revenue.
With the new Hulu Ad Manager platform, she said, Disney is the first to make premium streaming TV advertising inventory directly available to more than 28 million small and medium-sized businesses.
Not giving up on theaters
Disney said that the company is not ready to give up on theaters, and appears to be taking a more cautious approach compared to WarnerMedia, which recently announced it would release all of its 2021 movies simultaneously in both theaters and HBO Max.
Part of the strategy to accelerate the company’s growth in the DTC space includes a mix of distribution options, such as releasing content through theaters and linear networks before it’s available on DTC services, said Kareem Daniel, head of the company’s new media and entertainment distribution group. Theaters in particular continue to help establish major franchises at the heart of the Disney flywheel, he said.
“Regardless of where it originates, all of our films and episodic series will inevitably end up as part of our incredibly rich and increasingly robust library of content on our D to C platforms,” he said.
Some major films will first premiere in theaters – such as Marvel’s “Black Widow” – while other series and movies will only be available on Disney Plus. Over the next few years, Disney will directly release on Disney Plus roughly 10 new Marvel series, 10 Star Wars series, 30 Disney live action, animation and Pixar series and features.
“With these Disney Plus originals, along with theatrical releases and library titles, we will be adding something new to the streaming service every week,” Daniel said.
A number of Disney and Pixar films had originally been planned as theatrical releases, but as part of its strategic pivot to a DTC business model, will now be Disney Plus originals, such as Pixar’s “Soul” and Disney's live-action adaption of “Pinocchio,” both of which will stream on Disney Plus at no additional cost.
The company will also release some films simultaneously in theaters and as streaming through Disney Plus premium access, such as “Raya and the Last Dragon” in March.
CEO Bob Chapek said the company took in $13 billion at the box office last year, which is nothing “to sneeze at.” And with a vaccine being rolled out, Disney is planning carefully around the pandemic and consumer behavior.