Disney’s dreams come true: a profitable streaming service
Disney’s dreams come true: a profitable streaming service
Disney has some good news to share: The media giant said in its fourth-quarter earnings report that its streaming services posted $321 million in operating income. That’s just two years after they were losing more than $4 billion. The company also saw a higher-than-expected 4.4 million new Disney+ subscribers.
The primary driver of Disney’s success is pretty straightforward: “They’ve had a great quarter in streaming, because people want to subscribe,” said Brad Adgate, an independent media consultant.
In other words, Disney’s got great content.
“‘The Bear’ and ‘Shogun,’ you know, they won Emmy Awards for best drama and best comedy,” Adgate said.
Disney also has ESPN, which satisfies sports fans, and it’s the big brand for kids who want to watch “The Little Mermaid” again and again.
The company’s also found success in its cheaper subscription tier with ads, said Michael Smith, a professor of information technology and public policy at Carnegie Mellon University.
“Adding the advertising tier has brought in more customers than it cannibalized customers from the full-paid tier,” he said.
Smith said Disney also got rid of the old structure with a movie division, a TV division and an international team.
“Bob Iger blew up that traditional organizational structure and made his work structure look much more like Netflix, where he’s got a division that’s focused on content, and he’s got a division that’s focused on platform,” he said.
Disney’s success is not that unique, said Brandon Katz, an entertainment industry analyst with Parrot Analytics.
“All companies are getting better from a monetary perspective in terms of streaming and narrowing losses to turn a profit,” Katz said, thanks to growing advertising and increasing subscription prices.
Plus, there’s the whole thing where it’s harder to share passwords now, “proving Netflix is not the only one that can … get you off that freeloading ability,” Katz said.
He said that success won’t last for everyone. Out of the eight main streaming services, he said the general consensus is roughly half will still be here in a decade.
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