Disney wins the Streaming Wars, then makes a questionable choice

It almost seems as if Disney’s plan was to offset some bad news with some good news but, in typical tone-deaf corporate style, the fact that what is good news for a company can’t possibly balance what may be bad news for consumers was never taken into account. So the same day that Disney announced what amounts to a victory in the modern Streaming Wars, it also confirmed that, in a few months’ time, its subscribers will either be paying more for access to the same content or they will have to watch ads if they mean to pay as much as they currently do. Wow. Classy, Disney!

In any case, numbers and facts first: Disney’s streaming offerings as a whole — this includes Disney Plus, Hulu and ESPN Plus — now boast a subscriber base of more than 221.1 million consumers worldwide, surpassing Netflix’s 220 million “and change” (after its recent loses). It’s obviously not an apples-to-apples comparison, but it really is an important milestone for Disney whose efforts in the streaming space during the last two years have been impressively successful: Disney Plus alone managed to add almost 14.5 million new subscribers during May, June and July, its consumer base surpassing 152 million globally. These are great numbers and well deserved.

The trend of Disney’s streaming services — primarily driven by the growth of Disney Plus — gaining traction while the opposite is happening with Netflix’s service is practically confirmed by the findings of JustWatch, the online video content information and recommendations website. JustWatch published an infographic, based on its own data of 25 million monthly users, illustrating that Netflix’s loss is essentially Disney’s win: when comparing the two companies’ streaming efforts during the first half of 2022, JustWatch found that there’s clearly more interest in Disney’s TV shows and films than in Netflix’s, corresponding to an almost identical increase and decrease in market share respectively.

Based on the number of hard-hitters released on Disney Plus since January — including a Star Wars show, a few Marvel shows and several notable movies of various kinds — that’s not hard to believe at all. There are more coming during the last three months of the year, too. On the content front, Disney is winning. It’s what was obviously expected of the largest entertainment company in the world and what Netflix feared would happen all along.

The company’s choice to increase the cost of its subscription, though — rather, the way it chose to announce it — may not exactly be cause for celebration. Disney confirmed that the new, ad-supported Disney Plus tier it unveiled back in March will be available to consumers on December 8th in the US (other countries will probably follow in 2023) for $7.99 monthly, which… yes, happens to be the current subscription cost of the service. The ad-supported tier is now called “Basic” while the tier with no ads is called “Premium” and costs $10.99 per month. Both tiers will share the same content, the same functionality, and the same technical specifications: ads are the only differentiating factor.

The cost of Disney Plus Premium is still lower than the Netflix equivalent, yes, but… let’s face it: most people were hoping that Disney would introduce a cheaper ad-supported tier than the current one, not charge $3 more per month for the privilege of not watching ads in the same content. How intrusive the ads displayed in Disney’s content are when watched through the Basic tier obviously remains to be seen. One can’t help but think, though, that The House of Mouse just “read” the streaming market and the way things are going — as well as where the competition, Netflix and Amazon Prime Video, currently stands — and felt that it can raise the cost of the “normal” Disney Plus tier with no real consequence.

The truth is that… well, Disney is right: $10.99 a month is still very good value for money compared to Netflix Premium (which costs $19.99 monthly) and the company obviously wants Disney Plus to start being profitable at some point (it’s been operating at a loss since its launch almost three years ago). There were other avenues Disney could have explored, though, before going for that monthly $7.99 cost of the ad-supported tier — especially when taking into account that the company will be making money with those ads! — such as lowering the technical specifications of the ad-supported streams and/or limiting the devices that are allowed access to those streams.

The way Disney handled this almost looks as if the company decided to put pressure, in a way, on its current subscribers to accept the higher cost in order to avoid the ads, rather than introduce an ad-supported tier in order to attract new subscribers. A lot depends, again, on how annoying the ads displayed within the Disney Plus Basic content will prove to be: if they are tolerable by most people’s standards, then $7.99 a month for Disney’s content with all the bells and whistles will be great and $10.99 for avoiding the ads a small luxury for anyone who can afford it. If that is not the case, however, then it will be a whole different story, no?