Disney and the streaming wars
The entertainment giant is fighting against Netflix and Amazon in the battle for more attention spans
Disney+ went live in the UK recently. It was a well-timed launch.
With many of us only allowed to leave their homes to go shopping or do exercise, there are going to be a lot of people milling around at home and thousands of parents eager to distract their children.
Disney+ isn’t the only media-on-demand service out there in the streaming stratosphere. Netflix has been sucking up attention spans across the UK for years now. So too have Apple, Amazon and NowTV.
Unlike those companies, Disney has been in the entertainment business for almost a century and it enters the market with a wholesome, cotton-candy smile brand that families everywhere fawn over.
Plane Crazy
The entertainment company has been building its family-friendly reputation since its founding in 1923.
Originally a cartoonist, Walt Disney learnt about animation in the early 1920s and figured that it was going to be the next big thing — smart guy, no?
He initially ran a company called Laugh-O-Gram Studio that was based in Kansas City. The firm barely lasted a year and, when it went bankrupt in 1923, Disney shut shop and bought a train ticket to Los Angeles with the money he made selling his movie camera.
When he got there, he linked up with his brother Roy and formed another company — the Disney Brothers Studio.
The new studio started out by making a series of animations called ‘Alice Comedies.’ These involved a young girl, called Alice, going on adventures with Julius the Cat, who, as you might imagine, was a cat.
It wasn’t until 1928 that Mickey Mouse would make his first appearance. The first film to feature him, called ‘Plane Crazy,’ wasn’t released after it received poor feedback in a test screening. Another, titled ‘The Gallopin’ Gaucho,’ didn’t get picked up either.
The third Mickey Mouse film that was made — ‘Steamboat Willy’ — proved a hit.
Why? It was the first cartoon with synchronised sound ever made. And this seven-minute movie acted like jet-fuel for Disney, sending his studio on a meteoric rise from which it has never really fallen.
Star Wars and cruises
The company’s staying power since then has been supported by massive expansion into almost every part of the entertainment industry.
In fact, it’s difficult to put into words how vast the Disney empire is.
The company employs almost a quarter of a million people, more than the entire population of Oxford. It operates cruises and theme parks and owns the Marvel Universe, Star Wars franchise and Fox Entertainment. Disney even publishes National Geographic.
Most of this expansion took place after Walt Disney’s death in 1966 and much of it has happened in the past twenty years.
But it’s certainly fair to say that Disney imbued his eponymous company with a dreamy, growth-minded ethos during his life.
It was Disney (the man) that came up with the idea for a theme park. The first Disneyland opened in Los Angeles in 1955. There are now six similar resorts in five different countries, attracting over 150 million people a year.
Disney also made shows for television when it was still a moderately new medium. He got his company involved in publishing and even looked at building a ski resort in California not long before he died.
Stream wars
Despite having its fingers in so many entertainment pies, Disney hasn’t managed to conquer the UK streaming market. At least not yet.
In the US, the media company long played second fiddle to Netflix. Shows on Hulu (yup, Disney owns that too) were only watched by 32 per cent of American streamers last year but 75 per cent had watched a TV show on Netflix.
All of this has changed in a matter of months. On the day it launched last November, over 10 million people signed up to use Disney+.
By the end of the year, that number had risen to 26.5 million and, at the start of February, to 28.6 million. The overwhelming majority of these people are in North America.
Netflix has 67.7 million subscribers in the same region, which means, in under four months, Disney was able to rack up almost 50 per cent of the number of clients it took Netflix ten years to onboard.
Across the Atlantic, around 60 per cent of UK streaming subscribers have an account with Netflix. Another 25 per cent use Amazon Prime and 11 per cent are NowTV customers.
Disney’s old UK streaming service, Disney Life, is only used by 2 per cent of British streamers.
More to come
These stats may look negative but, as the US shows, Disney can hardly be ruled out. In fact, one survey from November last year found that 25 per cent of Brits wanted to sign up for Disney+.
That may seem like a surprisingly high number but people in the UK love what Disney does.
In 2019, the six highest-grossing films in the UK were all made by Disney and, of the top ten most successful films, seven were produced by the entertainment giant.
Given what happened in the US, it seems more than possible that this success could transfer from the big screen to the streaming screen.
Content control
One of the major weapons in the Disney streaming arsenal is its rights to hugely popular movies and franchises, like Star Wars and Marvel.
In the past, Disney has licensed this out to other media companies. Both Star Wars and Marvel have appeared on Netflix, for example.
But Disney made the conscious decision to stop licensing its content out to many competitors — which is why Netflix fans may have noticed some films and shows disappearing from the platform since the start of this year.
All of this hands tremendous power to Disney. Not only does it gain by being able to offer streamers all of the media that it owns the rights to, it also has the power to remove those shows from competitor platforms.
And even if companies like Netflix are able to get their hands on that content, they’ll still be paying Disney to license it.
Deep pockets
Another factor to consider is Disney’s size and the huge amounts of cash it has at its disposal.
Last year, the group spent $24 billion on its film and TV empire. For now, only $1 billion of that amount is spent on Disney+ but the company plans on increasing that to $25 billion by 2024.
By comparison, Netflix put $15 billion into its content last year, though the firm has said that it will also be upping its spending to stay ahead of the competition.
Determining who will come out on top of this is difficult to say, though it’s likely to make for good viewing for all of us.
What will happen in the stock market?
Much as Walt Disney recognised the value of TV in the 1950s, Disney the company is now banking on streaming becoming the core component of home entertainment in the future.
The meteoric rise of Disney+ in the US suggests that it has made another wise decision in doing so. But predicting how this will impact Disney’s share price is a whole other story.
As it’s such a large company, streaming will probably continue to be one of many revenue streams for Disney — at least in the near future.
That means any success that Disney+ sees could be offset by failures in other parts of the Disney empire. We can see this happening right now. Millions of people are signing up to Disney+ but no one is going to Disneyland.
Ultimately, victory in the streaming wars would be great for Disney but that doesn’t mean we’ll see a spike in its share price as a result. So if you were thinking of speculating, it might be wiser to sit back, grab some popcorn and stream something. We’ll let you decide which platform to use.
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