Can Disney outspend Netflix on streaming content?

Streaming is the new battleground in the entertainment industry, and Disney has emerged as one of the top global players in the space. Just one year after it launched Disney+, the new service has already attracted nearly half as many subscribers as Netflix, while spending only a fraction as much on fresh content.

But Disney’s stepping on the gas with investments in several new original series based on its most popular brands, a signal that the House of Mouse is quickly shifting to a streaming-first business strategy.

Disney is doubling its content investment
Management’s latest spending targets for Disney+ called for $2 billion in content amortization expense in its fiscal 2020 (which ended Oct. 3), with a gradual increase to the “mid-$4 billion range” by fiscal 2024. By comparison, Netflix laid out $13.9 billion on additions to its content library in 2019. Disney+ won’t match Netflix anytime soon on content spending. In an investor presentation on Dec. 10, Disney outlined plans to increase its annual content expense to between $8 billion to $9 billion annually over the next four years.

However, across its three streaming offerings – Disney+, ESPN+, and Hulu – Disney expects content expense will reach between $14 billion to $16 billion in fiscal 2024. Still, it’s apparent that the company doesn’t need to spend as much on new content as the streaming leader to grow its subscriber base – perhaps because its catalog was already so deep. While Netflix has 195 million subscribers, Disney+ had signed up an impressive 86.8 million subscribers as of Dec. 2. There’s no doubt many Disney+ subscribers are signing up to see “The Mandalorian,” which has been its marquee show. It also had success recently with the film version of the Broadway hit “Hamilton” and the release of its live-action “Mulan” remake as a premier-access title.

Dozens of new originals are coming to Disney+
Management estimates there are more than 1 billion “true” fans worldwide who have deep emotional connections with Disney’s brands. That figure likely factored into management’s updated outlook that Disney+ could attract between 230 million to 260 million paid subscribers by fiscal 2024.

Not surprisingly, much of Disney’s investment in Disney+ will go toward several originals from its Star Wars and Marvel franchises. In total, Disney recently unveiled plans for 10 new original Star Wars series, 10 original Marvel series, 15 live-action series from Disney and Pixar, and 15 live-action films from Disney and Pixar. All of these are set to release over the next few years on Disney+.

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