Disney+'s European debut reached millions, but what comes next?

After Disney+'s European debut reached millions, what comes next?

Disney’s streaming service, Disney+ accrued five million mobile app downloads during the debut of its European launch, taking its global subscriber base beyond 30 million customers.

Disney+ expanded in Europe earlier this week (24 March) across seven markets including the UK, Ireland, Austria, Germany, Italy, Spain and Switzerland. It already runs in the US, Canada, the Netherlands, Australia and New Zealand.

It is now the second most downloaded app on iOS in the UK, just behind Houseparty. The five million mobile app downloads in Europe, analysed by App Annie, doesn't take into account browser and connected TV use that debut day but give a good indication to the service's momentum.

As of February it had 28 million subscribers, 3.6 million ahead of Wall Street expectations. In its first-quarter (more if you count its preorders) it has gathered around a sixth of Netflix’s base (167 million), showing how the house of mouse is gaining momentum.

The lockdown conditions of the pandemic appear to have catalysed greater subscription video-on-demand consumption, due to a mass shift in media consumption behaviour.

What's behind the successful launch?

Thomas Husson, vice president principal analyst at Forrester, said: “There is strong demand and it is executing its marketing plan well."

He said the brand is particularly good at "creating anticipatory experiences, and has a strong offering and lots of relevant content to create an emotional connection with its audience".

Forrester expects Disney+ to "continue to be successful" and amass as many as 60 million paying global subscribers by year-end. This is well ahead of expectations from the board room.

But the UK market is a key market for Disney to crack, with an established base of leading broadcasters and competitors. To help with its UK visibility, it partnered with Sky a few weeks ago, getting it on the Sky Q platform. Disney dubbed it a reach and distribution play to millions of households. This deal had another important element. While Disney owns the full rights to stream The Simpsons in the United States thanks to its acquisition of 21st Century Fox, those rights didn’t initially extend overseas. Sky held them in the UK. But a deal was cracked out, a relief to many in the UK who wanted access to 600+ episodes of the show in the one service for the first time ever.

Corona complications

The adfree streaming service’s launch couldn’t be better timed with a locked-down populace reaching to fill time once occupied with work. However, due to consumer demand and pressure on networks, Disney+ has committed to reduced streaming quality by 25%, along with Netflix, Amazon, Apple, Facebook and YouTube.

Husson said: “With millions of households across Europe stuck at home because of the coronavirus crisis, video streaming is exploding. In normal times, this would be a perfect timing to launch a new streaming offering.”

But the pandemic has hit Disney hard in other parts of the business; isolation orders have hindered its theme parks and the closure of cinemas removes its box office capabilities.

On that topic, helping to swell the interest was the redirection of Frozen 2 from cinematic release (smothered by lockdown) to digital exclusive release. In the UK, the Official Film Chart said it scored the second-highest digital debut, lagging behind another Disney property, Avengers Endgame. In doing so the property came to screens three months early.

Stunts and acts like this may be important in the coming months. When asked four months ago, 60% of Brits were reportedly unwilling to pay more than £20 a month for all their SVOD services. A quarter wouldn’t breach £10. Current economic conditions may change these caps.

Competition

Graham Staplehurst, global strategy director for BrandZ at Kantar, said it would be difficult for brands to combat Netflix’s brand awareness, the legacy and reputation of Disney wouldn’t have been an issue. A noted image problem for Disney+ was proving that it has “adult appeal”. In TV it has had an appeal “limited to families with young children,” a perception that could harm it going forward when it pushes into quality adult content, music and sport.

On this note, Husson was impressed by the competitiveness of the property, especially with its advanced promotional subscription now down to £49 a year.

“This is cheaper than Netflix or Amazon Prime Video. The value proposition is very strong for kids and families, but let’s not forget Disney also owns Pixar, Marvel, Star Wars, and National Geographic. However, Disney will need to accelerate its pipeline of new and local originals to retain Disney Plus subscribers. UK consumers expect fresh and local content, so it will become imperative for Disney+ in the longer term to broaden out its content offering to appeal to a wider audience and to invest more in local creation the way Netflix and Amazon do.”

Joy Bhattacharya, managing director, Accenture Interactive, agrees that the pricing is competitive but wonders if it is sustainable at current levels. Disney+ remains an adfree zone, like Netflix, but Bhattacharyra is pushing programmatic product placement as a means of better monetizing users.

“As with most streaming platforms, strong growth from initial subscriptions is likely. However, techniques to monetise content to sustain long term growth should be a key consideration. A price hike for monthly subscriptions is one option, but this can quickly turn off consumers if they’re constantly being asked to pay more for the same content – especially if they subscribe to multiple services.”

But Disney+ could feasibly run as a loss-maker if it encourages people to engage with other parts of its offering.

“It now has the option of recommending owned content to viewers based on previous preferences, and in turn, driving awareness of, and recommending relevant merchandise and trips to its resorts.”

It's just the first steps of the journey, there is a brand awareness ahead. In the US, Disney was leagues ahead in battle against Apple TV+, which launched in November 2019, and packages HBO Max and NBC’s Peacock that hit the market early in 2020.

You'd bet your house of mouse that there are similar effects on a wider scale too.

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