Disney+ adds 11.8m subscribers, but concern remains over SVOD saturation

Disney+ forecasts to hit 260 million subscribers by 2024

Disney+ added 11.8 million subscribers in Q4, taking its global total to 130 million, but industry commentators continue to purport SVOD saturation.

Speaking to investors yesterday, Walt Disney Company’s chief executive officer Bob Chapek laid out his ambition to move Disney beyond its TV offering.

”While multiplatform television and streaming will continue to be the foundation of sports coverage for the immediate future, we believe the opportunity for The Walt Disney Company goes well beyond these channels,” he said.

Having already beaten its aim of 60 million subscribers in its first five years, Disney has revised its numbers forecasting 260 million subscribers by 2024.

”This marks the final year of the Walt Disney Company’s first century and performance like this – coupled with our unmatched collection of assets and platforms, our creative capabilities and unique place in the culture – gives me great confidence we will continue to define entertainment for the next 100 years,” Chapek said.

Despite staggering sign-up rates, Ryan Cook, UK managing director at Criteo, warned of slumps in subscriber growth referencing data that showed just 2.9% of households in the UK took up a new subscription between Q2 and Q3 in 2021.

”New, brave content requires huge funding, which may not come as easily from subscriber growth in key markets like the UK,” Cook says. According to Cook, Disney should explore alternative pricing models to allow it to compete with Neflix and Amazon.

”Advertising-based subscription models, in particular, have been touted by the likes of Peacock as a natural evolution for audiences, as demand for more new content and genres grows,” he said.

Cook said Disney+ is in a strong position to offer ad-funded options as it already has strong first-party data and an addressable audience for advertisers. ”Should Disney lean into existing partnerships – such as its mobile network distributor, O2 – it could further increase its breadth of audiences trialing an ad-supported version of the service. This would give Disney an incredibly high-value proposition for advertisers,” he said.

Dave Castell, general manager of inventory partnerships EMEA at The Trade Desk, claimed consumers are getting tired of paying ”through the nose” for premium content. According to The Trade Desk’s research, consumers are increasingly turning to free platforms and in the UK consumers are twice as likely to try a new show on an ad-free platform than a service with a monthly fee.

”In the face of a cost-of-living crisis in the UK and other economic stressors resting on consumers overseas, Disney+ will need to think carefully about its business model in 2022 to maintain the rapid growth it has seen so far,” Castell said.

With a yearly content spend of $33bn, Chapek has hinted that prices could rise in 2023. He said the increase in content investment next year will give it ”the impetus to increase that price-value relationship even higher and then have the flexibility if we were to so choose to then look at price increases on our service”.

Disney+ tests livestreaming

Earlier this week, Disney+ ran a successful livestream trial, suggesting its ambitions to add live to its streamer. Disney kept its test low key, running a livestream of the 94th Oscar nominations with simultaneous streams broadcast on Hulu, ABC News Live and the Academy Awards’ various owned platforms, including Oscars.com.

If Disney+ can integrate live into its service, it opens up opportunities for live sports in the US and in Latin America where Disney is aggressively buying sports rights. Europe isn’t considered to be important to Disney+’s sports strategy as Disney-ESPN has a strong base on the continent.

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