Disney+ beats Netflix, but must adapt to a saturated market

The telecom giant seems to have succeeded in its bet on converting the audience of its movies, series and TV channels to “streaming” services.

It took five years for Disney to overtake Netflix. The telecom giant announced Wednesday evening that it has attracted 221 million subscribers across all its video-on-demand platforms (Disney+, Hulu, and ESPN). Netflix, pioneerflow‘, he noted last month hiring a total of 220.7 million subscribers. It’s an important symbolic victory that nonetheless conceals costly challenges ahead. Disney is already reviewing several growth targets downward, changing its pricing and offering.

The huge bet that Bob Iger, president of Disney, announced in 2017, was a success: audiences for his films, series, and TV channels turned to his services in “flowIt occurs roughly according to the direction of Burbank (California). The huge threat that Netflix posed to traditional ways of distributing its products has been effectively countered.

North American market saturation

In the last quarter, Disney+ brought in 14.4 million new subscribers, well above analyst expectations. However, Disney’s transformation into a leader in “flowNot financially profitable yet. This activity caused a loss of another $1.1 billion in the last quarter. Losses during the same period last year amounted to only 293 million. However, the profitability target in 2024 was confirmed by the group’s chief financial officer who delivered Disney’s April-June performance on Wednesday night.

As with Netflix, the growth of video on demand is primarily global. Signs of saturation are multiplying in the North American market, which poses a problem for other studios such as Warner Bros. Discovery, NBCUniversal, and Paramount, for example, which decided a bit late to follow Disney’s strategy.

The latter thinks it has enough catalog and basic perks like “star Wars“The Superheroes”marvelTo continue developing the new Disney+ empire. It is clear, however, that the costs associated with its international deployment as well as market congestion complicate its strategy. Kristen McCarthy, Disney’s chief financial officer, is forced to revise employment expectations for subscribers that remain validated this winter by Bob Chapek, the group’s president, who succeeded Bob Iger. Disney+ is now targeting between 215 and 245 million customers by September 2024. The target of 230 to 260 million has been abandoned. The loss of rights to broadcast cket matches, which is very important for the Indian market, partially explains this modification.

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Disney’s spending on new content is also revised down for fiscal year 2022. It will drop from $32 billion to $30 billion. Importantly, Disney+ prices are also changing, as inflation forces millions of families to revise their entertainment budgets. On the other hand, subscribing to a service “flowAd-free ads will rise 38% in December. It’ll fetch $10.99 a month in the US, which is still less than the equivalent Netflix offer. On the other hand, a new service peppered with ads will be offered at a price of $7.99. This last option is intended to retain less affluent clients. Netflix, which is now launching a new service that is cheaper, but partly financed by ads, will have to adapt to this new configuration.

Fortunately, Disney can once again rely on its theme parks to ensure it thrives. The end of the epidemic and the return of crowds to Disneyland scattered around the world reinforced its results. And the quarterly turnover of this pole, the most profitable of the group, jumped 26% to $21.5 billion. Profits from this business, for which Bob Chapek was responsible before he was named number one, shot up 50% to $3.6 billion.

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