Blistering Pace

Financial news wizards Bloomberg have been running the numbers on the state of streaming and there are some interesting nuggets to pull out of their work. The big takeaway is that Disney+ have signed up 95 million customers in 14 months. They describe this as:

“A blistering pace with no precedent.”

They highlight that it took Netflix 9 years to reach that level, although Netflix were basically inventing the market as they went. However Disney’s achievement is important, as they are essentially a legacy media company. They own documentary channels, sports channels, local news and so on. However they have made the kind of in-roads into streaming that no other legacy media company have managed.

The prime difference is that Disney starts with the product first, then looks for channels. So they create content that is interchangeable and can be pushed out as movies, streaming, into theme parks, then animated for spin-offs and so on. All the competitors in legacy media are cable first, so seem to struggle to be channel agnostic.

The League Table

Netflix has also experienced record growth so Disney won’t be market champions anytime soon. However they have most definitely broken clear of the following pack and joined the Premiere League that includes Amazon Prime. Amazon and Apple TV do not publish their figures but as Apple TV was estimated by analysts to have around 40 million subscribers worldwide they are already dropping down the league.

Consider, though, that Disney have done this with only two really heavyweight shows – The Mandalorian and WandaVision. If they really start firing, is the power of their IP too great for some of their competitors? Disney IP is incredibly valuable overseas, outside the US, so it is likely that any growth boost they may need may come from overseas. 2020 Revenue from streaming, omitting the non-reporters of Amazon and Apple, is as follows:

  • Netflix: $25 billion.
  • YouTube: $19.8 billion (excluding subscriptions).
  • Disney: $10B-$11 billion.
  • Viacom: $2B-$3 billion.

Using revenue as a measure rather than subscribers this shows the size of the gap Disney have to make up, especially as you consider Amazon and Apple are in that mix somewhere. HBO Max or Peacock also do not have the financial data required to break out the scores but they are both a long, long way back from Disney at, or about, Viacom levels.

The larger revenue gap between Netflix and Disney can also be explained an increasingly important stat in the world of streaming – ARPU. That is Average Revenue Per User. Disney has very flexible local pricing. Netflix is less flexible with most overseas territories being charged something similar to the US price.

In India, for example, Disney is smashing subscriber numbers by charging local rates – anything between $5 and $20 per year. Netflix is triple that top end price. Shake this out globally and it makes Disney have an ARPU of $4, whereas Netflix comes in at $11.

So hilariously, even though it only operates in the US, Hulu is still a larger business than Disney+ in terms of revenue because it costs three times as much.

Best Of The Rest

ViacomCBS (owner of Paramount+), NBCUniversal (owner of Peacock) and WarnerMedia (owner of HBO Max) are going to be under intense scrutiny from investors now to improve on their rookie numbers, and prove to longer term thinkers that they are viable future businesses. If they can’t they will be judged unable to make the transition from cable to streaming and the TV equivalent of a Blockbuster type fate could await them within a couple of decades.

They are still producing shows and selling them or licensing them to other providers and have made nothing like the investments Disney have made. HBO Max are looking like moving, but more by accident that by design with the Warner Bros. pandemic movie release strategy being watched closely.

There is also apparently a big debate raging right now inside NBCUniversal. Executives know Peacock is their future but legacy structures and old fashioned cable thinking are probably arriving at the wrong answers.

ViacomCBS will probably be in the same boat. Look how quickly they sold Coming 2 America when Amazon came calling, waving their wallet around.

There is an age old adage in business that if you can’t get into the top three in any industry then you either get out, or go boutique. Can you imagine a world where former media giants like NBCUniversal and Viacom have to consider themselves boutique, niche players?