Rapid Adoption of Disney + Brings with it Alternative Challenges

The build-up of unprecedented pent up consumer demand has seen Disney+ achieve an impressive 28.6 million paid subscribers worldwide in under 12 weeks since launch. However, such rapid early uptake will pose challenges moving forwards that are more usually associated with established services.

Initial uptake has largely been driven by Disney fandom and attractive pricing, according to Futuresource’s latest Living With Digital survey, but the research also highlighted that subscribers were attracted to the service by a range of further factors that contributed to the initial uptake, including 1 in 5 respondents that cited the removal of Disney content on Netflix drove them to the platform in the USA.

It is also no surprise that young families have been a key contributor to this strong performance; subscribing households with children under 12 are almost twice as likely to take Disney+ than the total base.

The breakdown of initial subscriber uptake below highlights how Disney’s development is already vastly different to other streaming services, with the usual gradual rise replaced by an instant overnight significant footprint:

• It launched on 12th November 2019 achieving 10 million subscribers in its first day.
• It added further 15.5 million subscribers in its next 46 days (to 28th December) to reach 26.5 million subscribers
• And has since added 2.1 million in its next 38 days into 2020, to reach 28.6 million as of February 3rd 2020.

It is worth noting that these figures not only cover the USA, but also its launch into Canada, Australia and The Netherlands, which Futuresource estimates account for approximately 20% of the global total.

Disney will by no means rest on its laurels as it strives to deliver continued strong quarterly gains, whilst being acutely aware of the increasingly cluttered competitive environment. This is particularly pertinent in the USA, where Disney+ has already penetrated ~22% of broadband households and where impending services HBO Max and Peacock will be strongest.

Partnerships & New Country Launches to Sustain Growth in 2020

Disney’s next quarter earnings release will inevitably show further positivity for Disney+ subscribers, boosted by its, perhaps tactical, 24th March launch in several key European markets; whilst in its core market of the USA, its Verizon partnership will continue to help support growth.

Further partnerships across its markets are inevitable and will become crucial to its long-term success. They will not only increase reach and drive new sign-ups, but also help keep customers sticky, particularly the more integrated collaborations with Pay-TV providers, as recently highlighted through the expected tie-up with Sky and Canal+ in France. Such expected collaborations were detailed in Futuresource’s blog from November 2019; Disney+ Signals New International Pay-TV Paradigm.

Churn Management & Service Stacking now Major Industry Trends

Key to Disney+’s long term success will be not only adding new subscribers, but also retaining existing customers. Its continued investment in original content throughout the year, including its announcement of new major exclusive series later in 2020, notably The Mandalorian S2, will be crucial to it managing churn.

Again, not surprisingly, over 90% of Disney+ subscribers are Netflix users, suggesting the two services will remain complementary, at least for the time being, with the library of content entirely different across the two services.

But as further new services launch (e.g. HBO Max, Peacock), and consumer familiarity with the availability of premium video streaming services grows further, service stacking will become more evident, leading to a steadily growing culture of streaming service management from consumers. i.e. consumers regularly churning in and out of services as they become increasingly savvy regarding the cumulative costs of taking multiple services.

Around one-third of current/previous Netflix subscribers in the USA and key European markets have cancelled their service and restarted in 2019, over half of these doing it more than once.

How leading services, not just Disney+, but Netflix et al, manage this churn will be crucial to such services maintaining in their impressive trajectory. Many services will be complementary particularly in terms of content, but stacking costs of services and competition for time may drive a steady shift in consumer mentality regarding ongoing loyalty to services.

Further details on Disney+ uptake, drivers and impact on the wider market, along with broader consumer behaviour development relating to video consumption, can be found in Futuresource’s imminent Living With Digital report.

About the author

David Sidebottom

David is a Principal Analyst – Media and Entertainment. David has over 20 years’ experience in a research and consultancy environment and is closely involved in researching, analysing and consulting on key content industry and consumer technology developments worldwide, with a particular focus on the evolution of digital business models in the TV, video and music industry. David works with a wide variety of high profile Futuresource clients across the content ecosystem including studios, broadcasters, technology companies, hardware vendors, service providers and industry associations. He also directs Futuresource’s long-running global consumer panel ‘Living with Digital’.