March 20, 2020
Disney+ is set to quickly become the third largest SVoD service in Europe, following its March 24th launch in key European markets. The current stay-at-home directive due to the coronavirus, along with additional distribution partnerships, are likely to see subscriber uptake reach even higher levels than previously anticipated.
Futuresource expects European service subscriptions to exceed 10 million this year and with the current unorthodox situation we find ourselves in, subscriptions will be further boosted. Despite this, Futuresource’s Living with Digital consumer research indicates that pent up demand will be lower than that seen in the US.
Disney+ will be one of the key drivers of the continued momentum of SVoD subscription uptake in 2020. Existing SVoD subscribers will drive uptake and subsequently higher levels of SVoD “service stacking”. In fact, those that already take 3 or more services are almost twice as likely to intend to subscribe than those with less than 2. It is expected to become the number 3 player in most of its phase-two launch countries (typically after Netflix and Amazon Prime Video), including the UK, where it will overtake Now TV.
The key challenge for Disney across all markets will be maintaining its growth in new subscriptions after such quick traction, whilst retaining its existing monthly subscribers; a snap poll conducted by Futuresource this week suggests that a slight majority of subscribers will be on monthly compared to annual plans. Uptake has slowed in its original launch markets in the early weeks of 2020, according to Disney’s financial releases in early February. This is supported by Futuresource’s Living With Digital survey, which in July 2019 highlighted that 25 per cent of respondents would definitely or probably sign up to Disney+ at launch, whereas actual uptake during the December 2019 wave was almost the same. This demonstrates that most people who intended to sign up had already done so around one month after launch.
If it is to continue to grow its overall base and appease investors, Disney will need to expand distribution partnerships and add flagship content on its platform, such as the unexpected early availability of Frozen II in its launch markets. Futuresource’s Living With Digital research suggests that it is the combination of the library/classic titles and new release Disney/Star Wars/Marvel titles etc which is most attractive to prospective subscribers. Over 70 per cent of Disney+ “intenders” rated each of these as attractive on the service. The service will launch fully loaded with virtually all Disney content ever produced, therefore steadily refreshing this with newly available content will be critical in keeping subscribers sticky.
As discussed in previous blogs, pay-TV partnerships will be a key driver of subscriber additions, but perhaps as important, subscriber retention. Integration into the Sky Q platform, alongside Netflix, will provide a seamless pan-service experience for subscribers, further consolidating Sky’s position as a key super aggregator. In the UK, one-third of those who plan to sign up to Disney+ already have a Sky Q box. With other telco and pay-TV partnerships being announced across Europe in recent weeks and months, service reach and awareness will be significantly boosted.
The wider uptake of Disney+ internationally will be discussed in an upcoming Futuresource’s Perspectives report. Its comprehensive catalogue and the fact that titles are set to remain on the service indefinitely has consequences for Disney’s sell-through and rental catalogue business, as it effectively positions the service as a digital locker.
In these uncertain times we are now faced with, one certainty is that Disney+ uptake will be impressive. While uptake will be further boosted by lifestyle impact from the coronavirus, beyond this point the service must (and will) evolve, with pricing eventually increasing, as it looks to drive sustained revenue growth and support lucrative merchandise sales. Disney+ is certainly set to become a key pillar of Disney’s overall financial success.