News Disney announces strategic restructuring of media and entertainment divisions.

[flynnibus]

Yeah but Disney World has 60 million annual attendance and a 1 day ticket costs more than a full year subscription Disney+.

I’m not even saying Disney+ is a bad idea. As a customer I like the product. I just think it’s a strange place to focus on business wise.

Consider what it costs to keep that wdw up, ready, and intersting to you to get that ap purchase.

Now consider what it costs to keep a dynamic, software based, flexible platform available that also has a TAM 30 to 40 x larger.

Your position is like asking why anyone would want an amazon model when you already have a kmart you give alot more money to because you only buy the occasional book at amazon...

 

[_caleb]

Consider what it costs to keep that wdw up, ready, and intersting to you to get that ap purchase.

Now consider what it costs to keep a dynamic, software based, flexible platform available that also has a TAM 30 to 40 x larger.

Your position is like asking why anyone would want an amazon model when you already have a kmart you give alot more money to because you only buy the occasional book at amazon...

This.
Also, Disney‘s costs go up the more people they have coming into the parks. With digital content, it’s the opposite– the cost to produce and distribute is the same whether they have a few users vs. millions of users. Meanwhile, the revenue only goes up with each new subscriber.

 

[UNCgolf]

There are currently 800 million streaming subscribers around the world. Globally, only 12% of households subscribe to a streaming service (40% of U.S. households currently subscribe). Disney+ is currently positioned with a low enough price (and solid enough content) that people are willing to subscribe even if they also subscribe to other services. There’s plenty of room for growth.

The problem, as was discussed somewhere else here, is that huge numbers of people aren't going to subscribe long-term. They're going to subscribe for a month and watch what they want then cancel. You also have huge numbers of people sharing accounts, where they are getting one monthly fee for 5 separate people living in different places. They aren't going to make big money off streaming if they can't keep people subscribed long-term. People subscribing for a month is a losing proposition.

It worked well for Netflix early on because they weren't having to spend the tremendous amounts of money required to produce their own content at the quality and quantity required to keep people subscribed. Now that older content is distributed across multiple platforms and every single service has to pump out original content to draw in viewers, the market is going to get very tight very quickly.

The other possibility is that you have to start watching ads despite your monthly subscription fee -- and I think that will probably happen eventually.

 

[TrainsOfDisney]

It worked well for Netflix early on because they weren't having to spend the tremendous amounts of money required to produce their own content at the quality and quantity required to keep people subscribed.

They also had 0 competition.

 

[flynnibus]

The problem, as was discussed somewhere else here, is that huge numbers of people aren't going to subscribe long-term. They're going to subscribe for a month and watch what they want then cancel. You also have huge numbers of people sharing accounts, where they are getting one monthly fee for 5 separate people living in different places. They aren't going to make big money off streaming if they can't keep people subscribed long-term. People subscribing for a month is a losing proposition.

It worked well for Netflix early on because they weren't having to spend the tremendous amounts of money required to produce their own content at the quality and quantity required to keep people subscribed. Now that older content is distributed across multiple platforms and every single service has to pump out original content to draw in viewers, the market is going to get very tight very quickly.

The other possibility is that you have to start watching ads despite your monthly subscription fee -- and I think that will probably happen eventually.

Networks like HBO would like to have a word with you...

Account sharing is a known grace... they can stop it if they want to. They chose not to. If it became a losing proposition youd see change.

Your whole theory of “people wont subscribe long term” is ignoring the history that people already do. You may have people hopping around services, but customers aren’t simply go without “tv content” they are going to be buying someones... and you aim to make that YOUR content.

 

[flynnibus]

They also had 0 competition.

Over the air?
Cable?
Redbox?

This is simply not true.

 

[J4546]

I havent watched a single streaming thing on my tv in months, Ive been using internet and videogames but me and my gf subscribe to disney+, Netflix, HBO, Hulu, Amazon Prime and Crunchy Roll. Theres pretty much always something to watch if you want to

 

[UNCgolf]

Networks like HBO would like to have a word with you...

Account sharing is a known grace... they can stop it if they want to. They chose not to. If it became a losing proposition youd see change.

Your whole theory of “people wont subscribe long term” is ignoring the history that people already do. You may have people hopping around services, but customers aren’t simply go without “tv content” they are going to be buying someones... and you aim to make that YOUR content.

HBO isn't really comparable to streaming services -- just as one example, there were very few people ever paying for HBO alone. They generally received HBO as part of an upper tier cable package with multiple other channels.

Netflix has had accounting profits recently, but their actual cash flow has been negative for several quarters because of how much money they've had to spend to produce original content. Although Uber/Lyft aren't a great comparison for various reasons, they are similar in that they are tech companies that the market loves, but that don't have a guaranteed route to profitability. The current version of streaming is very young and, as I said above, isn't even comparable to Netflix of 5-10 years ago.

There's almost no way that all of the current services can exist at their current price points. You're eventually going to see advertising or further price increases, if not both. As for your final sentence -- it's not a theory. It's a fact. Of course some people do, but many do not and I've seen numbers that show younger generations are far more likely to use the one month a a time model. That's a huge problem for streaming services as currently organized. Most of these streaming services are eventually going to fail for the exact reason you just stated.

Disney+ is actually in a better position than most other services, though, because of the Disney/Pixar vault of movies. They have a stronger solid base of subscribers (parents with kids who want to watch the Disney/Pixar films) than the other services.

 

[UNCgolf]

Over the air?
Cable?
Redbox?

This is simply not true.

None of those were streaming services with immediate on-demand viewing of everything available.

I feel like you're being deliberately obtuse.

 

[flynnibus]

None of those were streaming services with immediate on-demand viewing of everything available.

I feel like you're being deliberately obtuse.

Netflix wasnt only competing with other streamers.... people werent buying netflix soley because it was IP based... they were buying into an alternate tv entertainment delivery method and packaging.

Netflix was trying to establish a new format and delivery method. Their competition was the incumbent and alternate formats. Not just streamers.

 

[TrainsOfDisney]

Disney+ is actually in a better position than most other services, though, because of the Disney/Pixar vault of movies. They have a stronger solid base of subscribers (parents with kids who want to watch the Disney/Pixar films) than the other services.

Agreed. Plus avengers and Star Wars.

I certainly think Disney+ is a good move. I just don’t think they should be putting all of their chips on Disney+ alone.

I feel like you're being deliberately obtuse.

Agreed. He knew what I meant. He’d rather prove that he is right vs. actually have a conversation.

 

[UNCgolf]

Netflix wasnt only competing with other streamers.... people werent buying netflix soley because it was IP based... they were buying into an alternate tv entertainment delivery method and packaging.

Netflix was trying to establish a new format and delivery method. Their competition was the incumbent and alternate formats. Not just streamers.

They were buying it because it gave them access to a huge library of films and TV shows that they could watch immediately whenever they wanted. I don't think Netflix was really serious competition for cable until they started producing their own content, and other services (like Hulu) popped up and gave cord-cutters access to currently airing shows. It was more of a supplement before that point.

I also think people forget (and some younger people may not even realize) that Netflix originally started as a DVD by mail service. Streaming was essentially just a way to get content to subscribers faster and without having to worry that the movie/show you wanted was out of stock.

 

[_caleb]

I think cable television subscriptions conditioned millions of American households to just expect to have to pay $50/mo.+ for television. Like it’s a basic utility. The video streaming services have taken advantage of this by pricing using numbers people are accustomed to paying even as they cut the cords.

I do wonder about how net neutrality may start to factor in- especially as 4K+ content uses more and more bandwidth. If that bandwidth is throttled for content on rival streaming platforms, expect more and more strategic partnerships that will make streaming more and more like the old days of annual contracts with cable providers.

 

[UNCgolf]

Account sharing is a known grace... they can stop it if they want to. They chose not to. If it became a losing proposition youd see change.

Forgot to respond to this part. At some point (likely when subscriber growth slows to a crawl) I think this will change. They'll want/need the chance to grab even more subscribers from former account sharers.

 

[_caleb]

I certainly think Disney+ is a good move. I just don’t think they should be putting all of their chips on Disney+ alone.

What makes you think Disney is putting all their chips on Disney+ alone?

 

[UNCgolf]

I do wonder about how net neutrality may start to factor in- especially as 4K+ content uses more and more bandwidth. If that bandwidth is throttled for content on rival streaming platforms, expect more and more strategic partnerships that will make streaming more and more like the old days of annual contracts with cable providers.

That is another point that could be a serious problem for some streaming services going forward, but who knows what will happen with that. Data caps are also an issue, because significant areas of the US have caps in place.

But streaming services don't really have any control over either of those (beyond lobbying, of course).

 

[flynnibus]

HBO isn't really comparable to streaming services -- just as one example, there were very few people ever paying for HBO alone. They generally received HBO as part of an upper tier cable package with multiple other channels.

Not sure what you are basing this on... premiums have been offered al la carte forever and continue be so. If it wasn’t viable, things would have changed to drive more. Second, HBO now (pure streaming sub) had over 5mil subs in the US alone.

Netflix has had accounting profits recently, but their actual cash flow has been negative for several quarters because of how much money they've had to spend to produce original content.

Its been down because the company was aggressively trying to move from just being distribution to having in house content. This is the comapny investing to drive future value. This is not a sign of weakness or uncertainty, but in fact the opposite. It means investment. The company has moved past proving the distribution and commercial models work and is now doubling down to protect itself for the next wave which is where all the content is hoarded verse being broadly licensed. (Because everyone else is moving into the format)

Although Uber/Lyft aren't a great comparison for various reasons, they are similar in that they are tech companies that the market loves, but that don't have a guaranteed route to profitability. The current version of streaming is very young and, as I said above, isn't even comparable to Netflix of 5-10 years ago.

They are poor comparisons in this conversation because those companies are still heavily subsidizing their price points and the natural balance point has not yet been market tested. Streaming is beyond that.

There's almost no way that all of the current services can exist at their current price points. You're eventually going to see advertising or further price increases, if not both. As for your final sentence -- it's not a theory. It's a fact. Of course some people do, but many do not and I've seen numbers that show younger generations are far more likely to use the one month a a time model. That's a huge problem for streaming services as currently organized. Most of these streaming services are eventually going to fail for the exact reason you just stated.

Disney+ is actually in a better position than most other services, though, because of the Disney/Pixar vault of movies. They have a stronger solid base of subscribers (parents with kids who want to watch the Disney/Pixar films) than the other services.

2014 is calling... they want their predictions back.

 

[flynnibus]

Forgot to respond to this part. At some point (likely when subscriber growth slows to a crawl) I think this will change. They'll want/need the chance to grab even more subscribers from former account sharers.

Its the drug dealer approach... let them get hooked.

 

[flynnibus]

Netflix didnt start producing original content because other content was lacking. They did it because it was the next evolution to prepare for the time when other content owners would start to box you out and see you as a competitor. As has been proven over and over in the ondemand market... marquee exclusive content is the biggest driving marketing force.

Netflix rightfully planned ahead knowing the content owners were not going to stand by idly while the distribution model evolved and formats like netflix changed the landscape. They Knew in the future the hottest shows would not be available to them.

 

[denyuntilcaught]

Over the air?
Cable?
Redbox?

This is simply not true.

Sleep is Netflix's greatest competition, according to Reed Hastings.