Disney Plus is encountering a challenge in embracing technology on its way to take on Netflix

take on Netflix

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Up until 2019, the streaming industry was dominated by the streaming giant Netflix – so much so that no other streaming service could convince you into canceling your Netflix membership. Well, in many ways, it still is. Anyway, for any new streaming service – regardless of how strong a channel it had been in the past – it was and still is quite a challenge to penetrate the market. 

So, when Disney Plus was launched in November 2019, it faced its fair share of challenges. However, Disney Plus was also able to shift the narrative in its favor in a somewhat surprising way. 

Let’s take a look at how the journey of Disney Plus has been so far in the streaming industry and how it has been encountering the challenges faced due to competitors like Netflix.

Netflix was the king

For the longest period of time, Netflix was the unrivaled subscription streaming service. More than a decade ago, the Silicon Valley native shifted to digital, becoming a staple in more than 195 million households globally and investing billions of dollars in content.

While earlier famous for bringing a variety of content under one umbrella by making it available for online streaming, Netflix further upped its game by gaining traction for its originals. 

So, by developing engaging original programming, analyzing user data to serve subscribers better, and, most importantly, allowing people to enjoy the material in the ways they want, Netflix disrupted the television industry in unprecedented ways and accelerated the trend of cord-cutting – so much so that, according to a 2021 report by Investopedia, an approximated 27% of American families planned to terminate paying cable service.

Enter Disney Plus

Towards the end of 2019, Disney Plus emerged in the technology world as a rival to Netflix, aiming to become a Netflix-style streaming business.

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Earlier, Walt Disney’s CEO Robert Iger had managed to help Disney achieve what was previously thought impossible: release “Star Wars: The Last Jedi,” “Black Panther,” and “Avengers: Infinity War,” among other billion-dollar blockbuster movies.

Clearly, Disney had a long history of acquiring content (including significant entertainment brands such as Pixar, Marvel, and Lucasfilm) and turning it into highly profitable companies – but building a global technology platform was quite a task that would put Iger’s extensive experience to the test.

However, when it was time to level up in the game by pushing Disney into a new direction, the company struggled to develop the infrastructure and technology to create a new online, direct-to-consumer entertainment service.

Here’s what Rich Greenfield, an analyst at financial analysis firm BTIG research had to say about Disney’s struggle in the world of streaming: “The real challenge for Disney is that most of the times Disney has touched technology, it’s blown up. It’s been the polar opposite of every time they touch content.”

According to Luis Cabral, a professor of media economics at New York University, entities (like Netflix) that initially concentrated on distribution, stood out more later on because of their knack for learning to produce content in addition to acquiring it. And content companies, including Disney, had not fared as well in learning digital distribution. 

So, that was a significant challenge faced by Disney in today’s era.

How Disney has been fighting its way up

The question was, “Can Disney Plus be in 100 million to 200 million homes worldwide?”

And the answer is surprising.

In barely a year, Disney Plus showed to be its own powerful siren, with over 86 million users – the majority of whom are not even homes with children. Then, leveraging its bundle strategy with Hulu and ESPN Plus, the Walt Disney Co. already had more than 137 million global customers in 2020.

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According to research from Parrot Analytics, Netflix is the streaming video king, but customers are gradually gravitating toward new challengers, such as the Walt Disney Company’s Disney+.

Owing to titles like “The Falcon and the Winter Soldier,” Disney has been getting a boost in attention to its streaming service. Disney buying Fox is a major factor that helps Disney be more than just a kids and family channel, which enables it to compete with Netflix.

Now, analysts predict that Netflix will have 295 million to 310 million customers by 2024. On the other hand, according to Disney’s forecasts, Disney is projected to have between 300 million and 350 million subscribers by the same time.

It is also important to mention that, after the pandemic, Netflix lost 430,000 subscribers in the US and Canada in Q2 of 2020. However, Netflix is still choosing to be nonchalant about it. According to a report published by NY Times last year, Netflix gave a statement something to the effect of “If Disney+ is hurting us, we haven’t seen it.”.

By downplaying its competition, Netflix is losing its once-strong grip on the industry. With 116 million subscribers (and growing!), Disney+ is already more than halfway to catching up to Netflix’s 209 million subscribers accumulated in a period of 14 years.

So, then, whatever will happen to the invincible Netflix’s kingdom? 

Well, looking at the numbers, it seems like Disney did face issues in the beginning, and penetrating a market so heavily influenced by Netflix was not a piece of cake – but Disney has shown commendable success in an incredibly short amount of time, owing to excellent business strategy and customer value proposition.

Perhaps, the question we should all be asking now is, “does Netflix need to learn something from Disney?”