Gordon Reid discusses Disney
Walt Disney Co.’s new streaming service gets its first big test of subscriber loyalty next month, when a free trial with Verizon Communications Inc. starts to expire.
Beginning Nov. 12, many of Verizon’s Disney+ customers will face a choice. They can starting paying US$7 a month for the service, they can upgrade to US$80- or US$90-a-month wireless plans that include Disney+, ESPN+ and Hulu at no additional cost, or they can cancel Disney+ altogether.
Both Disney and Verizon have a lot riding on their partnership. While neither company will reveal how many mobile and broadband customers took the free 12-month trial offer, Disney said in February that about 20 per cent of its customers -- or about 5.3 million -- had come from Verizon in the first two months. Ampere Analysis in London says the number today is higher. The Disney+ service, which launched on Nov. 12 last year, signed up a total of 60.5 million customers in its first nine months.
The partnership with Disney is a key part of Verizon’s effort to move mobile subscribers up to its US$80-a-month unlimited data plan from ones that cost US$55 to US$65. At the end of June, “well more than 50 per cent” of Verizon customers were enrolled in the unlimited plans, the carrier said at a recent investor conference.
The companies are working hard to keep Disney+ subscribers and attract new ones. For example, customers still in the free promotional period can add ESPN+ and Hulu for US$6 a month through the end of their trial, with the price rising to Disney’s everyday US$12.99 thereafter.
Of all the options, Verizon customers will most likely move up to the higher-priced plan or drop the streaming service, according to Ampere analyst Tony Maroulis.
“We would expect the ‘start paying US$7’ to be the smallest of the three outcomes,” he said.
Disney Chief Financial Officer Christine McCarthy told investors at a Sept. 10 conference that cancellations have been in the range of expectations. “We’re pretty pleased,” she said.
At an investor conference on Sept. 15, Verizon Chief Executive Officer Hans Vestberg said the Disney+ strategy was similar to one the company implemented with Apple Inc.’s music service, in which customers initially got the product free for six months and were then asked to pay US$10 a month after that. Verizon received a cut of that fee from Apple in return, he said.
“Some of you know how great a start it was for Disney+ where we brought these customers in, and they are now starting” to get paying customers, Vestberg said. “Now, we do that on the next step, together with a wider Disney+.”
Disney+ includes unlimited streaming of virtually all of the company’s classic animated films, as well as those under the Marvel, Star Wars and Pixar brands.
“The Mandalorian,” the first live-action Star Wars TV series, was a big hit on the service with its launch last year. The second season starts Oct. 30. If Disney follows the same pattern of releasing episodes at one per week, customers who joined at the launch will need to subscribe for at least two more months to watch them all.
“We think there’ll be a desire for many people to either subscribe to see it or to stay on the service because it will be there,” Disney’s McCarthy said last month.