Dusseldorf Netflix is coming under increasing pressure. While the streaming pioneer lost 1.1 million subscribers in the first half of the year, follower Disney is quickly catching up with an increase of 24.7 million customers. The entertainment giant’s streaming services have now even caught up with the previous market leader.
Taken together, the Disney offerings Disney+, Hulu and ESPN+ have 221 million customers worldwide – the same number as Netflix currently. “We had an excellent quarter,” said Disney boss Bob Chapek on Thursday night when the half-year figures were presented.
Disney’s best-known service, Disney+ alone, now has 152.1 million subscribers — 22.3 million more than at the start of the year. The streaming service, which only started in November 2019 as a Netflix hunter, gained significantly more customers in the past quarter than experts expected. Disney’s offering also includes the Hulu service, which is primarily used in America, and ESPN+, which primarily shows sports broadcasts.
Experts explain the strong growth of Disney and the weakening of Netflix primarily with the content. Disney has strong brands like Star Wars or Marvel that are very attractive. That’s how Disney+ ended up with the Star Wars series “Obi-Wan Kenobi” and Marvel’s “Ms. Marvel” recently had two big hits that attracted many viewers to the service.
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Disney benefits from Netflix’s early entry into the market. The service from Silicon Valley has stirred up the media industry over the past 15 years and, with growth rates that Disney is now showing, has quickly become the market leader in the streaming sector.
Netflix wrestles with ‘wear and tear’
The problem: Netflix has already reached a lot of people. Bernd Riefler, head of the Munich analysis company Veed Analytics, observes: “With some Netflix customers, wear and tear effects appear over time, they try other providers and stay with them.”
>>>Read also: Netflix loses again as competition grows
Because there is no patent on what Netflix offers: industry experts now count over 200 streaming services.
However, the signs of wear and tear should also affect Disney at some point. By the end of 2024, the group expects Disney+ to have 215 to 245 million viewers. So far, the US media giant had assumed up to 260 million customers.
Disney increases prices by 38 percent
At the same time, Disney used the strong demand for its streaming services to initiate strong price increases. The standard subscription in the US will cost $10.99 per month instead of $7.99 per month from December – an increase of almost 38 percent. Disney has not announced any price increases in Germany. However, prices are likely to rise soon in Germany as well. In Germany, Disney + costs 8.99 euros in the standard subscription, Netflix comes to 12.99 euros.
One reason for the price increases: Like Disney, other major streaming providers are also fighting for the favor of viewers who regularly want to watch new series and films at home with high investments in their streaming platforms.
When presenting the half-year figures, Disney also announced details about its new subscription model. For the first time, the provider is introducing a cheaper subscription, but viewers have to accept advertising breaks. This offer is said to cost $7.99 a month – as much as the ad-free subscription used to be.
Netflix and Amazon are also working on an advertising-financed subscription model
Disney follows a new trend in the streaming market. Many providers are currently introducing a cheaper or free, advertising-financed subscription model.
In times of rising prices, companies want to retain customers for whom a standard subscription is too expensive. On average, households are willing to spend 20 euros per month for streaming subscriptions, according to figures from the online advertising company Trade Desk.
In the coming year, Disney wants to introduce a corresponding subscription option in other countries. Even Netflix, which has long resisted an ad-supported option, is planning such a model in response to declining user numbers. At Netflix, the advertising variant is expected to start in early 2023, initially in “a handful of markets,” it says.
>> Read also: Why Amazon’s free streaming service “Freevee” is not an alternative to Amazon Prime is
Amazon launched the free service “Freevee” in Germany at the beginning of August. However, the free alternative offers significantly less video content than the standard Amazon Prime service. In addition to films and series, Amazon Prime customers also have advantages when ordering goods, such as faster delivery.
However, the advertising-financed offers will not be a sure-fire success, and users are skeptical, especially in Germany: A study by the strategy consultants Simon, Kucher & Partners shows that the willingness to accept advertising in streaming services is less pronounced in Germany than in almost any other country.
Disney doesn’t make any money from streaming
Despite good customer growth rates, entertainment giant Walt Disney is still burning money with its streaming offerings. In the past quarter alone, the streaming services made a minus of 1.1 billion dollars.
This weighed on the media and entertainment division, whose profit fell 32 percent to almost $1.4 billion. According to Disney, the streaming unit should make a profit for the first time in the 2024 financial year.
In addition to the film business with the streaming offer and the amusement parks, Disney also owns cruise ships and various television channels. Total revenue for the quarter rose 26 percent year-on-year to $21.5 billion. The clear increase was also due to the amusement parks, whose operating result more than doubled.
More: The once rapid growth of the streaming pioneer Netflix is over. Three reasons why this is – and what Netflix can do about it.