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5 lessons learned from Disney’s successful challenge to Netflix

Sorry Netflix, it’s a you issue, not a we issue.

When Disney said in its earnings call earlier this week that Disney+ saw another huge increase in subscribers in the same quarter that Netflix lost nearly 1 million, it became clear that the churn issues impacting the latter streaming service, may not be an industry problem . It might be a Netflix specific issue.

And maybe this streamer could learn a few lessons from Disney. In addition to gains from Disney+, which added 14.4 million subscribers since April, Disney products Hulu and ESPN+ also saw significant gains. The three combined now have 221.1 million subscribers to Netflix’s 220.67, surpassing the latter for the first time (although Disney is bundling its three services and counting each subscription as one).

Here are five takeaways from Disney’s big recent success in adding subscribers — and how it could impact the future streaming landscape.

1. People want the most bang for their buck

The bundling option is crucial. At a time when inflation is causing pricing issues, consumers can pay several dollars less per month for three Disney streaming services than Netflix’s HD price. That’s more choices to appeal to more people in the household, and it likely means people can cancel other services by bundling Disney’s cheaper ones. It’s worth noting that Discovery just announced plans to merge Discovery+ and HBO Max into one company, although other corporate synergies also play a role in this decision.

2. Streamers are all-in on ad-supported platforms

See “Save money” above — while the luxury of watching TV ad-free was certainly a major draw in the early days of streaming, in recent years consumers have become more tolerant of watching ads. Both Disney and Netflix plan to launch ad-supported platforms by next year, which will lower prices for subscribers. Again, inflation has sparked interest in saving, and services that cater to this need will flourish.

3. Carving out niches helps

Viewers know exactly what they’re getting on Disney+ (family plan) and ESPN+ (sports). The specificity of the services sets them apart from more generic options like Netflix and HBO Max, which feature a mishmash of popular content at a time when the saturation of streaming services is starting to overwhelm consumers. A Nielsen report found that nearly half of respondents felt it was difficult to find the content they wanted because there were so many options. (And go back to point one — almost two-thirds want bundles.)

4. Sport is very important

In recent years, almost all of the top 20 programs on television broadcast have been sports. It’s the only area where traditional television still reigns supreme, and nobody knows that better than Disney, ESPN’s parent company. That’s why ESPN+ has a solid 22.8 million subscribers. Netflix has yet to pursue a serious bid for the rights to a top sports league, although other streaming platforms like Amazon, AppleTV+, and even Twitter have done so. To be a true player in streaming, companies need a sporting element as consumers want to cut down on their overall packages and tie it all together.

5. International subscriptions are just as valuable

Most of Disney+’s second-quarter subscriber growth came outside of the U.S. and Canada, with international subscriptions up 6 million and Disney+ Hotstar (available in India and other parts of Southeast Asia) growing even more. Disney has long been a global company doing global business. Wearing cricket on Disney+, for example, has made it a must-have in India. Its ability to identify strong international content and monetize those subscribers will continue to make a difference.

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