News were all over the place saying how Disney+ was able to surpass Netflix in terms of subscribers and in a much shorter time.
It is as though Disney and Netflix are in the same business. In my view, they are not.
Just because you have a streaming service, it doesn’t mean you are a competitor to Netflix.
Amazon, Apple, and Disney have gone onto the streaming service but they are not trying to make it the main business unit. The purpose of streaming is more for customer retention, to keep them in the ecosystem and make the subscription more valuable and stickier.
Amazon bundles it with its Prime membership. Apple did it as part of its overall services strategy – you use Apple devices and hence you should use Apple services too.
Even Walmart is looking for a streaming partner to offer to their Walmart+ members. Is Walmart competing with Netflix? Obviously not. It is to make their membership more attractive.
As for Disney, it focuses on the flywheel effect – you don’t just watch a movie by them, you visit their parks and buy their merchandise. Hence, Disney focus on building the ecosystem.
With an ecosystem, the customer lifetime value is definitely much higher than what a pure streaming service can achieve.
Cable TV used to be one of the main distribution channels for Disney. But Netflix came and disrupted that distribution channel. That broke Disney’s flywheel. Disney cannot sit and do nothing so they launched Disney+.
Netflix wants to make streaming the centerstage but Disney was thinking of repairing the hole caused by Netflix, so as to make their flywheel whole again.
I must say it was effective speaking from personal experience. I subscribed to Disney+ after I watched Dr Strange in the Multiverse of Madness because I wanted to know the prequel. The story was captured in a series named WandaVision and was exclusive only on Disney+.
Hence I would say Disney has managed to mend the hole well but the job isn’t complete yet. There will still be billions to be spent on maintaining it although management expect Disney+ to turn profitable in 2024.
Streaming is the main business for Netflix but for Disney, it is one of the pillars in its ecosystem.
