Disney+ Set to Shake-up the Streaming Wars in a Big Way

In April 2019, Disney announced its upcoming video streaming service, Disney+. The new streaming platform will reportedly broadcast content from its main network and subsidiaries, including Pixar, Marvel, National Geographic and 20th Century Fox. In the months since the announcement, the anticipation of Disney+ already seems to be causing major shifts in the power dynamics of the streaming market.

Disney will face a relatively easy entry into the streaming market. Throughout the history of the streaming market, Netflix has always taken the lion’s share. Despite underperforming this year compared to new user estimates, Netflix still maintains a strong foothold. According to The Motley Fool, Netflix is still reaching 90 percent of its target market, or 158.8 million viewers, in comparison to Amazon and Hulu, which are reaching 53 percent and 42 percent, respectively. Hulu’s 18 percent hike in penetration is especially notable. The Disney+ service release mostly accounts for this increase, as Hulu, now owned by Disney, will be included in the Disney+ bundle. As the current state of the market clearly shows consumers subscribing to multiple streaming services simultaneously, the barrier to entry is less daunting for Disney+, which not only offers a differentiated product but also boasts ownership of the already existing and growing Hulu platform.

Disney+’s go-to-market strategy includes compelling early-subscription deals as well as a competitive pricing model. With a deal in hand that provides subscribers with the third year free when they buy two years, Disney+ can attract a customer base that goes beyond its serious fans. The pricing model, on the other hand, is based on a relatively low initial price of $6.99 per month. This model allows Disney+ a strategic starting point to both compete with already established streaming services, such as Netflix, and potentially raise its prices once it has gained a large number of consumers who bite into its value proposition. These two aspects of Disney+ allow it to effectively position itself in the streaming ecosystem and market toward a large base of potential customers.

As Disney wishes to pivot to the streaming market, it will face considerable competition from major businesses looking to do the same. The primary new entrant alongside Disney+ is Apple, which intends to implement its Apple TV+ later in the year. Apple’s existing ubiquity, as well as its greater capital investment in its streaming service, makes it a formidable entrant. Apple also offers the cheapest service at $4.99 per month. However, the service only includes original content, rather than conventional, syndicated content. Meanwhile, Disney+ offers its original content for $6.99 per month, but also has a $12.99 bundle which includes ESPN+ and Hulu at a discounted price. Disney’s original content, including its own movies, Pixar movies and upcoming shows, surpass in quality what Apple and Amazon offer and will rival that of Netflix. This is mainly due to the fact that its movies, which will now be available on the platform, have proven to be widely commercially successful, while Apple movies start from scratch, and Amazon dedicates a meager budget to substantiate both quality and quantity. With the integration of ESPN+ and Hulu, the Disney+ bundle offers leading sports content and a variety of syndicated content that rivals Netflix, all in addition to premium original content. The attractive pricing model, coupled with the variety Disney+ offers, makes it the dominant entrant in the streaming market, ready to take on the current giants.

In addition to unveiling its streaming platform, Disney+ will likely perform well due to its purported partnerships with the other major streaming services and platforms. By placing its product with Apple, Amazon and Google, Disney+ skyrockets its accessibility, providing attractive original content and its bundle across all platforms. Such accessibility primes Disney for optimal market penetration. Partnering with platforms that offer their own streaming services also enables consumers to subscribe to Disney+’s basic service in addition to another platform’s streaming service, allowing them to obtain the traditional service alongside Disney+’s original content.

Disney+’s greatest competitive advantage within the market lies in its packaging versatility. The Disney+ conglomerate consists of its original content which can be subscribed to independently from ESPN+ and Hulu at a reasonable price. Disney+ thus stands in stark contrast to the higher prices found in the monopolistically-competitive original content market. Such pricing enables the product to be widely accessible to consumers who do not seek full commitment to all of Disney’s streaming services. Simultaneously, the Disney+ bundle is full-service with both leading original and sports content, all at a competitive price with the other services.

Disney+’s original content enables it to confidently compete against other streaming platforms, especially Netflix. Although Netflix is considered a trailblazer in the streaming market because of its pioneering platform infrastructure, its service has been running on several licensed shows, including Breaking Bad, Grey’s Anatomy and The Office. A study conducted by 7Park Data concluded that these licensed shows generate 80 percent of Netflix’s U.S views. In the context of the current streaming competition that Netflix faces from other emerging services, particularly Disney+, these numbers are alarming for Netflix. Having licensed shows responsible for most of Netflix’s views present several disadvantages, including the risk of consumer turnover in case the licensing companies, such as WarnerMedia and NBCUniversal, decide to with draw their shows from the platform. In fact, Netflix has already faced such issues, particularly with Friends and The Office among many other shows and movies leaving its platform by 2020 and being ushered into Disney+.

With the saturation of the streaming market by different bundles from Amazon, HBO, Netflix and now Disney+, consumers find themselves facing an unprecedented variety of online entertainment choices competing for their views. Amid this competition, Disney’s original content, compelling pricing model, and marketing strategies have enabled it to already earn many subscribers even before launching, placing it in a favorable position down the road.

  • ConcernedPelican

    I doubt that Disney+ will have much impact on the market overall because of it’s lack of “great” content, it doesn’t have too many movies or tv shows that consumers are waiting to jump on unless they somehow release a Disney Movie before it is released in theaters. Disney+ doesn’t necessarily have something for everyone and it doesn’t follow Netflix’s approach. An example of Disney+ failing was when Mandalorian’s season ended recently and many people cancelled their accounts as their wasn’t any other content worth watching, and nothing big related to Star wars or Marvel is going to come until next year. This caused Disney+ to try to put out more content to attract audiences but this has largely failed. The hulu/ESPN add-on is insignificant as well as many customers have largely chosen to ignore this add-on as anything valuable. The demographic that they are largely targeting is youger kids so the complete dearth of original content for adults is something to see as well. Besides the point, this is “Dartmouth Business Journal” and there are no sources or references of any kind on this article or others? Are you actually kidding me? You guys think that this is supposed to be a reputable source of information let alone a “journal”, no wonder that Ivy leagues are truly not what they used to be and are admitting kids who have no thirst for knowledge but rather a hunger for “prestige”. You can see the clearly liberal slant on this article too. Also why in the heck are there two authors for such a short and ill-conceived article? I doubt that anyone will respond to this but these are my valid concerns and I do think that Dartmouth is going downhill.