Disney gave us a lot to unpack during their earnings call yesterday. Disney+ was popping bottles of champagne with ~60M paid subscribers. More importantly, in my humble opinion, was the announcement thatMulan will be going straight to consumers for a purchase price of $30. Let’s ignore the old straight-to-VHS or -DVD negative connotations for a moment. Its 2020, we’re still stuck at home, and movie theaters are going belly-up. Without that source of revenue to recoup production costs estimated at $200M, you can’t rely on $6.99 subscriptions to turn a profit.
This is the natural evolution of streaming services: subscriptions + purchases. If you want early access or exclusive content, you will have to pay. Or wait 6+ months until its available for “free” as part of the subscription service. ESPN+ has done this with major events like UFC. Customers can make the choice if they want to wait or miss out on the exclusive content, and streaming services find their additional stream of revenue. While Disney spent $27.8B last year on original content, Netflix was climbing the charts at $15B. Netflix would be smart to adopt a similar model with their 73M subscribers in the US alone, reaching over half of US households. For now, they are focused on cutting costs and canceling under-performing content.
