Monday, May 16, 2022

How Does Disney+ Make Money? Let’s talk business

How Does Disney+ Make Money? Let's talk business
How Does Disney+ Make Money? Let’s talk business

Disney is the proud owner of nearly everything in Hollywood including Disney+. For generations, Disney has been responsible for a few of the most memorable moments in mainstream pop culture. To strengthen its dominance in the industry, in 2019, Disney dived into the streaming sector. Fast-forward a few years, Disney+ has over 90 million subscribers, whilst subscribers are rapidly growing.

Now the question arises, how does Disney+ make money? This article will shed light on that topic and talk about how Disney+ makes money.

Media Streaming Services along with Disney+

Disney’s advent to the video streaming service industry in 2019 can be contemplated as late. Netflix launched its on-demand video streaming back in 2007, Hulu launched its service to the US public back in 2008. Disney+ acquired 60 percent of Hulu was acquired in 2019. This makes Disney+ one of the mainstream on-demand platforms.

On-demand video streaming services are quickly taking up more screen time at home to the extent that it is putting tremendous strain on broadband networks.

In Europe, Disney+, Netflix, YouTube, other platforms were needed to reduce the streaming quality of films/videos for some time, as they were told by the EU that their services are overwhelming ISPs.

No matter the bandwidth issues, demand for media streaming is going strong. As per estimates, the global market for on-demand streaming will likely be reaching up to $108 billion in the forthcoming 5 years. The US generates the highest revenue. Disney+ is expected to remain one of the main players.

Disney+ Subscription Plans

As of now, it has 2 subscription plans: a monthly plan for $6.99, which provides full access to all the TV series as well as the movies on the platform. The other one is an annual plan that costs $69.99 per year. You can download your favorite shows for offline viewing, this comes as part of the subscriptions.

International users in Europe, Canada, Australia, along with New Zealand, Disney+ launched a new service called Star on Feb 23, 2021. Here you have access to thousands of new Disney Originals, TV series, blockbuster films from 21st Century Fox, as well as domestic titles, are present.

According to its official website, if you already have a Disney+ account, Star will be a part of your subscription, at no extra charges. However, the inclusion means new price points for international users.

How Does Disney+ Generate Surplus?

We have to examine Disney’s business model to understand the money is made.

The Walt Disney Company has a significant advantage from the start when compared to its competitors. First, it owns a few of the most iconic Hollywood movie franchises; Star Wars, Marvel, animated films by Pixar Studios to name a few. Disney also owns classic titles such as Frozen, The Lion King, as well as the High School Musical.

Disney’s strategy is to capitalize on its content to keep viewers hooked. The continuation of Star Wars, as well as the Marvel Cinematic Universe, are excellent examples. Hit titles like The Mandalorian and WandaVision, spin-offs of the franchises.

How does Disney make Money with Originals: Disney+ Versus Netflix?

Netflix sought out to emphasize quantity, to make its originals shorter in terms of episode length. In 2019, Netflix put forth more originals than the entire US TV industry did in 2005. The period was considered the era of peak television. In 2020, Netflix rolled out over 110 originals. The product of the strategy was short-term gains.

It is precisely because of their virality that the buzz was short-lived, at least on social media. A meme referencing The Queen’s Gambit can be quickly replaced by one from Bridgerton.

Disney+ plays the long game, as of now, it seems to be working out well. Since its establishment, Disney+ has invested over $500 million in originals. Disney looks to pump in $8-9 billion more. Despite the profits falling low to as much as 45 percent in the 1st year, Disney+ is expected to turn over a profit in 4-5 years.

Disney+’s Licensing Wars

Did you know that Disney has a licensing agreement with Netflix? It also has a licensing agreement with Starz.

Before Disney+’s launch, the company had licensed many of its movies as well as TV series to Netflix. As per reports, the contract stipulates that every film released by Disney from January 2016 to December 2018 will return to Netflix in 2026. After they do, they should not appear on Disney+.

This means that hits like Zootopia, Coco, Black Panther, along Avengers: Infinity War will eventually be heading over to Netflix after spending time on Disney+. This will undoubtedly affect Disney+’s future financial performance, however, that does not mean that Disney has no way of getting around it.

In early 2020, it announced that it would start licensing its originals to pay-TV. Also, to streaming operators in the Middle East as well as North Africa. This means a new stream of income. Disney has banned all Netflix advertisements from its TV channels, excluding ESPN.

Disney+ has licensed its content to Starz. Starz is a premium cable as well as a satellite TV network. However, while running after the rights to Star Wars: The Force Awakens, both parties have come to a conclusive agreement whereby Disney+ will start showing ads for Starz.

Future For Disney+

Currently, Disney+ is still trailing behind the competition, however, its current business model and statistics elucidate promising forthcoming. Analysts agree that at the rate its subscriber is growing, it’s projected that it will surpass Netflix in the total number of subscribers by 2023.

Originals are expensive to produce, the revenue from licensing deals helps fund its upcoming series, making money. All things considered, Disney+’s business model is a giant sustainable cycle, if it’s not making a remarkable profit currently, it will make the required profits in the future.

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