During Disney’s Q3 FY19 earnings call they announced the pricing of the Disney+ bundle which is Disney+, ESPN+, and ad supported Hulu for $12.99 a month. Well, that was easy, I’m going to be a customer. Interestingly, at $12.99 a month, you got to wonder if Netflix will ever be able to raise prices because it is clear that Disney’s streaming offering is going to be a loss leader for the company even with their content portfolio. At least for now, Disney’s integrated business model will flex towards movies, merchandise, and Disney parks.
It will be interesting to see how Netflix chooses to combat this, because in a simplistic way of viewing Netflix’s progression, it’s essentially the inverse of Disney’s. Netflix started with distribution of content, now is making content, and then the natural next steps would be to merchandise and create games. Disney is the inverse with creating content, merchandise and games, and now is finally getting into distribution of content. I mention this because a few years ago the idea was that content was king, and generally I still believe this to be true, but then why is Disney now starting takeoff. My thought, the content portfolio and the combined distribution of it drives more value than just the content alone (value differentiator) and content distribution alone (value aggregator).
Netflix needs to continue to make content, and so does Disney. In the end, customers win!