Disney, HBO And The Battle To Differentiate
Just Owning Premium Content Is Not Enough, It’s All Franchises
Not intended to be investment advice. I do currently own shares in Disney.
Disney and HBO are the two companies I think of when I think about premium entertainment content. Both of them are widely regarded as being a step above the competition (though Netflix is gaining fast) in terms of quality, proprietary content.
So why is it that Disney has been able to gain such incredible traction with its Disney+ streaming service with 86.8 million subscribers while HBO Max has languished with just 12.6 million subscribers? It’s not like Disney had a massive head start, launching just a few months before HBO did (plus HBO’s streaming services have been around for the better part of a decade with confusing names like HBO Now, HBO Go, etc.). Even if you count all the subscriptions to legacy HBO streaming services that are eligible to be converted to HBO Max, HBO’s total number of streaming subs is a mere 28.7 million.
I’ve long been of the view that in this day and age where both media distribution and content are becoming increasingly commoditized, truly differentiated entertainment content becomes even more valuable. Twenty years ago, entertainment content was limited and there was very little choice — we could only watch what was currently on TV.
Netflix, YouTube (and much faster Internet) changed that. Now there’s way more on-demand content than we can ever hope to consume.
This means that content for the sake of content is no longer worth very much. Why would I endure a crappy show (plus commercials) when I can instantly and effortlessly switch to something better? But the best content still has value. And I would argue that being the best is even more valuable because when everything else is commoditized, quality is the only variable that matters.
And the best content is pretty much all owned by Disney, HBO, and to a lesser extant Netflix…
