Disney's new streaming service is costing them billions of dollars: Industry veteran
At long last, Walt Disney Co. launched its video-streaming platform, Disney+, last Tuesday. Ten million people signed up in the first 24 hours, a stunning feat considering the deluge of rivals flooding the market. By comparison, it took HBO Now about four years to reach that milestone.
The rapid adoption is a testament not just to the power of Disney’s brand but also to a business strategy that stands in stark contrast to this month’s other big streaming debut, Apple Inc.’s TV+. Disney sold a US$7-a-month service using a colossal back catalog of content and a single episode of a new buzzy series based on a well-known franchise, Star Wars. Apple was forced to bet big on a slate of expensive — and so far, not widely acclaimed — original movies and TV shows.
Disney+ got off to a rocky start with streaming glitches, but the outages ultimately stemmed from a good problem: overwhelming demand. More people streamed Disney+ from a phone or tablet on launch day than watched Amazon.com Inc.’s Prime Video, which had a 13-year head start.
The popularity of Disney+ is driven in large part by an explosion of nostalgic offerings. Titles like Pinocchio and Sleeping Beauty were often expensive and hard to find unless you hung onto a VCR. Disney has invested in originals, too, but I found myself glued to the library of classics. I haven’t even gotten around to watching the new Star Wars offshoot, the Mandalorian.
Disney Chief Executive Officer Bob Iger has been touting this “rich in brands” approach. “There are 30 seasons of The Simpsons there,” he told Bloomberg Businessweek in a recent interview. The big test will be whether the service can grow its catalog of originals fast enough to keep customers interested after the nostalgic novelty wears off.
Apple TV+, on the other hand, feels empty after just a couple weeks. There’s not much opportunity to binge-watch because, well, there’s simply not enough content to binge. The Morning Show, its flagship series starring Jennifer Aniston and Reese Witherspoon, seems to be improving as the first season progresses, but with only one new episode per week, some critics are already questioning whether the US$5-a-month price tag is worth it. Every company has faced this question, Amazon and Netflix Inc. included, but they all had plenty of licensed content from other studios to lean on.
Apple appears to grasp the need to find ways to keep subscribers paying: Bloomberg reported last week that the company is exploring a mega subscription bundle of music, news and TV for as soon as next year. Such a bundle may make subscribers less likely to cancel when there’s a drought of new shows as long as they can fill the time with their favorite albums and magazines.
But for now, my seven-day trial to Apple TV+ is already up. I received my first email receipt, incidentally, while watching Star Wars: The Force Awakens on Disney+. As the streaming wars play out, the metric that may be most indicative of success won’t be how many people sign up but rather how many cancel.
And here’s what you need to know in global technology news:
• Speaking of Star Wars, Elon Musk criticized Boeing for charging NASA US$90 million per seat to fly astronauts to the International Space Station, a cost Musk’s SpaceX can purportedly do for 39 per cent less. Here on Earth, a Musk lieutenant was in Las Vegas for development of an underground transportation system.
• HP rejected Xerox’s offer for a takeover. The board voted unanimously against the proposal, saying the price was too low but that the company is open to exploring a deal.
• After high-profile investments in WeWork and Uber whiffed, SoftBank raised roughly US$2 billion for its next startup mega-fund, a fraction of its US$108 billion target. Meanwhile, WeWork faces an SEC inquiry.
• Google is heading to the U.S. Supreme Court, in a multibillion-dollar copyright clash with Oracle over code used in Android. Hopefully the justices have brushed up on their programming knowledge.