Just as Disney reaches the top, it looks to have made a potential slip

OPINION: It’s been a good year for Disney as its streaming services overhauled Netflix’s subscriber base to reach over 220 million customers.

It’s worth heavily caveating this isn’t 220+ million for Disney+ alone, but the total for all Disney’s streaming platforms that includes ESPN+ and Hulu. Disney+’s lifetime total is currently at 152.1 million as of July 2022.

Much like the latest entry in the Predator series, Prey, Disney has caught up to Netflix, looked it square in the eye and said “this is as far as you go”. With HBO Max on seemingly shaky ground, and neither one of Paramount+ and Peacock that interested in a fight for subscribers, it’s between Netflix, Disney+ and (probably) Prime Video for top dog status in the global SVOD market.

Where Netflix has been trying to stem the losses of subscribers, Disney+ added a rather ridiculous 14.4m subscribers. Part of that jump is due to new entries in popular and long running franchises like Star Wars (Obi Wan) and the MCU (Moon Knight, Ms Marvel) along with shows such as Pam & Tommy and The Dropout. The streamer’s affordability is also a key point of differentiation, for 4K content it’s about half Netflix’s price.

Which makes it odd timing that Disney would announce its ad-subscription tier that arrives later in the year would be the same price as the current ‘basic’ one, with a new tier arriving in the US that costs $10.99. In effect, those who pay $7.99 will need to jump to the more expensive tier if they want to watch the same content without ads.

That is, to put it lightly, rather cheeky; that you now need to pay more just to get enjoy what you already had. There’s a few ways Disney could have introduced an ad-funded tier – I would have expected a cheaper price (say, $4.99) or for it to be free, like Amazon’s FreeVee. Maybe even make the ad-funded tier cheaper and restrict it to HD releases and not include 4K.

Some of those ideas are perhaps a little complicated to enact and compromised in terms of serving the same content to everyone, but the idea of spending more just to avoid ads doesn’t sound consumer-friendly and an obvious attempt to push rather than encourage subscribers. Just when Disney reaches the summit, it looks to have carelessly slipped on a rock.

It’s understandable why Disney would do this from their perspective, and speaks to the amount of investment in streaming services that doesn’t seem sustainable over a long period of time. The total losses of Hulu, ESPN+ and Disney+ platforms reached $1.1bn, an increase of $300 million. Streaming services undercut TV in terms of pricing to become loss leaders, but that only highlighted how expensive TV is to produce, especially at the level streaming services are doing.

It’s likely the reason why HBO Max put the kibosh on several shows/films and in reality, I suspect streamers would prefer you pay a lot more for access to their libraries but would audiences accept that? It didn’t work with Netflix and we’ll find out with Amazon and Disney when their price rises come into effect.

With the cost of living rising and inflation building to worrying levels, Disney could find itself in the same position as Netflix when the new price tiers come into being in the U.S. Or perhaps subscribers will accept the ads and go on with their streaming business. At this moment in time, I can’t help but feel that Disney is wading into some troublesome waters.