Image source @ Visual China
The text | new eyes, the author | Gu Yu, editor | Sang Mingqiang
With the launch of platforms such as Amazon Prime Video, Disney+ and HBO Max, the streaming industry has reached a watershed moment.
On the one hand, industry competition has intensified, and the leading company Netflix has begun to show a decline; On the other hand, after decades of development, the industry has changed from a user incremental market to a user stock market. Even though digital TV research predicts that 550 million more streaming users will be added worldwide by 2027 amid the phasing out of cable TV, it will not be easy to achieve massive subscriber growth in the short term.
In this situation, how to break the game has become the most concerned proposition for many players. Although the business strategies of streaming media platforms are different, this matter oriented to user needs has become an industry consensus, from the popularity of membership to the rise of live broadcast, short video and other services, each streaming media platform is actively exploring ways to break the game.
For a long time, various streaming media platforms have taken Netflix as the industry benchmark, and its success once made players in the streaming media industry think that they had run through the development model of "burning money to make content, changing content for users, and then reaping sustainable profits". Until this year, Netflix's subscriber base continued to decline, its stock price plummeted, and it began to seek reforms to make other platforms in the streaming industry realize that Netflix's business plan no longer applied today.
At this time, Disney+ rose to prominence, and in less than 3 years, the number of users exceeded 150 million, becoming the second largest streaming media platform in the world, second only to Netflix. Not only that, in August this year, Disney's three streaming platforms Disney+, Hulu and ESPN+ combined 221 million subscribers, surpassing Netflix for the first time.
Disney+'s strong momentum gives hope to other players in the streaming industry. For a time, how Disney+ breaks through Netflix's first-mover advantage in the global streaming media market, how to attract a large number of users in a short period of time, and whether it will become an era of user stock competition, the next platform that leads the streaming media industry has become the most concerned thing for people from all walks of life, and it is also a problem we want to discuss today.
01 Content is the core competency
In November 2019, Disney+ was officially launched, and the number of users exceeded 10 million in just one day, and by the end of the year, the number of users had exceeded 26.5 million. Previously, some analysts predicted that Disney+ would gain 10-18 million subscribers in a year, and in less than three months, Disney+ exceeded the quota.
An important reason for the rapid growth of subscribers is the relatively low subscription price of Disney+, which costs only $6.99 per month for individual subscriptions and $12.99 per month if it adopts a joint subscription model with ESPN+ and Hulu. At that time, the minimum standard for Netflix subscription plans was $8.99/month, and HBO Max subscriptions were as high as $14.99/month. Compared with the two, the price advantage of Disney+ is highlighted.
Standard version price / dollar of each streaming platform New Eye self-made
But the price is not the determining factor affecting the number of subscribers, compared to Apple TV+, which was also launched in November 2019, although it has maintained an ultra-low price of $4.99 / month since its launch, but due to its insistence on originality, it has not purchased the copyright of any series, until February 2021, the number of users exceeded 10 million. It can be seen that compared with price, content is the primary factor for user choice.
In order to enrich the content library of Disney+, Disney officially acquired 21st Century Fox in 2019, and since then has formed a content system including Disney, Pixar, Marvel, Lucasfilm, Fox and National Geographic, bringing users nearly 500 movies and 7,500 episodes. Not only that, then Disney+ CEO Robert Iger promised to produce 120 movies, add 2,500 episodes and 60 platform-specific original content within five years.
Rich content and relatively low prices have made Disney+ the most cost-effective streaming platform in the minds of users, and the number of subscribers has exploded.
In the face of Disney+'s strong growth momentum, Netflix chose to increase its film and television investment year by year to attract more subscribers, but this did not have a significant impact on the growth of Disney+ users. As of the first half of this year, the number of subscribers to Disney+ has exceeded 150 million. Disney predicts that by 2024, Disney+ will have between 2.1 and 240 million subscribers.
Under the competitive pressure of streaming platforms such as Netflix, the steady growth in the number of Disney+ subscribers is due to the choice of differentiated competition in content.
Disney+ has always been positioned as a "happy dream maker" and "family fun streaming media platform", committed to creating high-quality film and television content for all ages, so it has been focusing on family, animation, comedy and other content creation, covering mainly children and teenagers. Netflix, on the other hand, is an all-round film and television platform, covering various types of films such as love, adventure, and music, and is committed to creating adult-oriented high-quality plots.
It's the rich children's library content that has helped Disney+ succeed. According to Nielsen's ranking of the 15 longest-watched streaming movies in 2021, 11 of them are from Disney+, 3 from Netflix, and 1 from Amazon Prime Video, which shows the broad development prospects of the children's market.
Nielsen counts the longest watched streaming movies in 2021 Image source New Eyes self-made
Nielsen Vice President Brian Fuller once said, "Children's movies have great value for repeat viewing. "Obviously, Netflix is also aware of this, and has gradually increased its investment in the children's sector, successively releasing high-quality children's animations such as "Klaus: The Secret of Christmas", "On the Moon", and "Loviby", but it is far from enough compared to Disney+, which specializes in this and has a large number of children's IP.
02 Brand effect brings unique advantages
Before the launch of Disney+, Disney was already a successful content platform, with well-known IPs such as the Marvel Universe, Star Wars, and Disney Princess series.
Disney expands its business into four sectors according to IP: media network, theme park resort, film and television entertainment, consumer goods and interactive entertainment, forming an ecosystem of "IP + media + content + theme park + technology", forming a business model with IP as the core for content creation, expanding the scope of IP content dissemination through media and theme parks, selling IP derivatives, and finally realizing the value of content. According to Wikipedia, Disney occupies five of the world's top 10 most profitable IPs.
Taking the princess series as an example, since the premiere of "Snow White" in 1937, Disney has successively launched movies such as "Aladdin", "Sleeping Beauty" and "Beauty and the Beast". After the theatrical screening, the second screening is carried out through Disney's television media, which constitutes the childhood memories of generations of teenagers.
After the Princess series IP fire, Disney integrated IP into Disneyland, created Cinderella and Sleeping Beauty Castle, and strengthened IP through puppet interaction, theme performances, project play and derivative sales, which not only made the IP image three-dimensional, but also enhanced user stickiness and enriched the content brand.
In addition, on the basis of remaking old IP, Disney actively expands the boundaries of IP, constantly enriches the character image in IP, spends nearly a century telling stories, imprints its IP in the memory of the audience, and forms a unique brand effect.
Ali Pictures CEO Li Jie once said, "Most of the world's film companies, except for Disney, only have content IP and no user brand. So when Disney+ went live with Disney's excellent story, it quickly attracted 10 million users in a single day.
In the streaming media industry, where "content is king", in order to attract users, each platform has expanded its content as much as possible to achieve perfection. Therefore, in the environment where the content of various streaming media platforms tends to be similar, the brand constitutes a unique competitive advantage of Disney+, mainly in two aspects: 1. Bring a certain user base; 2. Improve user stickiness.
With the rapid development of the streaming industry, there are tons of series for viewers to choose from, and the needs of viewers are limited, and brands can help them quickly position. According to the 28th Law, 80% of users watch 20% of the videos, while 80% of the videos are only followed by 20% of the users. This means that the era of "wine aroma is not afraid of deep alleys" has passed, and any good drama needs to have a certain amount of attention first, and then it can stand out with high-quality content and become a hot drama, which makes the Matthew effect of the industry more obvious.
Like Netflix in the past, the "cast a wide net, fish more" content strategy of launching nearly 400 TV series and movies a year is no longer applicable, and streamers should focus on larger, more visually appealing plots to keep users growing. For example, in 2021, Netflix launched a total of 395 original TV series, while Disney+ had only 32, in contrast, Disney+ users grew by 44.4 million, while Netflix only 1.8 million.
When the scale of users in the streaming media industry approaches saturation, the focus of each platform shifts from user increment to user activity, of which user stickiness has become a key indicator.
Taking the industry giant Netflix as an example, under the membership system, in order to maintain user stickiness, they will continuously launch new plots with high intensity for a period of time, and use content to make the audience spontaneously subscribe or renew the platform. But as mentioned above, as the Matthew effect intensifies, this model no longer applies.
The brand effect formed by Disney's hundreds of years of operation has brought a certain user base to Disney+ and enhanced user loyalty. That is to say, compared with Netflix, the audience is more patient with Disney+, which makes Disney+ have more time to polish the boutique plot, so as to obtain the premium effect of head content, consolidate user loyalty on the basis of increasing user scale, and form a virtuous circle.
03 Positioning user needs is the future development direction
Unlike traditional service industries, the user needs of the streaming media industry are not only diverse, but also changeable.
As film and television giants have participated in the streaming industry, while users have more choices, the requirements are also increasing. In the face of the ever-changing consumer market, in addition to strengthening its own content advantages, how to segment users and accurately identify user needs has become the most concerned issue for streaming media service providers, and Disney+ is no exception.
As mentioned earlier, in order to attract more users, Netflix's content covers a wide range, from children to the elderly, from comedy to horror, all aspects, which leads to more content than refinement. Due to the large number of new series released by Netflix every year, consumers cannot accurately identify in the face of massive content, resulting in an increase in the cost of information search, which is not conducive to the increase of user scale and user stickiness.
Disney+ has the advantage of being a latecomer, learning from Netflix's excellent experience and implementing some improvements. On the one hand, Disney+ has well-known IPs such as Marvel, Pixar, Fox, and National Geographic, with wide content coverage; On the other hand, in the face of complex user needs, Disney+ will actively adjust the positioning of its own IP, and diversify the rich content library according to user needs, which not only enriches IP content, but also reduces the user's information search cost, and promotes the improvement of user scale and user stickiness.
On the basis of maintaining the original family carnival content, in the face of Pixar, which is more popular with women, Disney+ actively adjusted the content scope of Pixar to make it more suitable for female white-collar workers. Similarly, the "Star Wars" series launched by Lucasfilm is loved by male white-collar workers, while Marvel focuses on teenagers.
For the demand for adult-oriented avant-garde content and sports, through the bundle sales with Hulu and ESPN+, Disney+ has expanded its business scope in disguise and driven the common growth of its streaming media platform. At the end of 2019, Hulu and ESPN+ had 30.4 million and 6.6 million subscribers, respectively, up 34% and 371% year-over-year.
It is reported that Disney CEO Bob Chapek is considering merging Disney+ with Hulu to remove the inconvenience of consumers switching apps, and the scope and precision of Disney+ content will be further improved.
While Disney+ subscribers are growing strongly, pitfalls are always there. Disney+ has been losing money for years since its launch, and according to the third quarter of this year's earnings report, although the number of users increased by 14.4 million in the quarter, the operating loss of Disney+, Hulu and ESPN+ also soared to $1.1 billion from 293 million a year ago. At present, it is still in the stage of burning money and robbing people.
In order to make up for the loss, when Netflix announced the implementation of a membership system with ads, Disney+ also actively followed. In August this year, Disney+ announced that it will officially launch a membership subscription standard with ads on December 8, which costs $7.99 per month. At that time, the pricing of the membership fee without ads will increase from $7.99/month to $10.99/month.
This fee still has some room for improvement compared to Netflix, but this is also a concern: with 220 million subscribers, Netflix with a standard package of $15.49/month, free cash flow is still negative so far, can Disney+ break through this situation in the future?
The answer to this question is still unknown, but what is known is that so far, Disney+ has still filled the world with reverie. After all, Disney, the world's largest content producer, has proven the stability of the IP-centered business model, and as a streaming media platform under the Disney Group, Disney+'s risk response ability is also worth looking forward to.