Although Disney and Netflix have almost exactly the same number of subscribers, for Netflix subscriber growth has stalled while Disney’s subscriber numbers are still on the up. That said, growth at Disney’s is slowing and both streaming giants are eyeing ad-supported membership deals as a way to streaming market growth.
Takeaways
- Disney has edged ahead of Netflix in the terms of subscriber numbers. With 221 million paying customers combined with Hulu and ESPN+, Disney+ had 221.1 million streaming subscribers at the end of the June quarter. The Disney+ bundle has slightly more streaming subscribers than Netflix, now reporting 220.7 million after losing almost 1 million subscribers in the last quarter.
- Writing on her Addition newsletter, tech journalist Charlotte Henry notes that matching subscriber numbers with Netflix is a notable achievement for Disney, having only launched in November 2019. A relatively low price point and an aggressive content release schedule have brought the channel subscriber success.
- As Netflix subscriber numbers have contracted, Disney+ added more than 14 million new customers during the last quarter. However, US customer numbers are basically flat for Disney and it has revised its 2024 target down from 260 million to a more modest 245 million.
Ad-supported growth
- Although Disney and Netflix have similar numbers of subscribers, customer value is higher at Netflix. The streaming market’s original champion makes around $12 per user per month. In comparison, Disney sees a $6.27 return from Disney+ customers and just $4.35 per user per month from its streaming bundle.
- The shrinking subscriber base at Netflix and Disney’s tight margins are focusing the networks’ attention on maintaining streaming market growth. Both have announced ad-supported offers as a way to bring increasingly price-sensitive customers back into the fold.
- Charlotte Henry sees the introduction of advertising as a significant moment in the streaming wars. Consumers are used to paid-for streaming services not carrying advertising, but household budgets are being increasingly squeezed in the cost of living crisis. Henry writes:
I’m sure many would rather have adverts and keep being able to afford a service they like than absorb a larger price hike or give up a streamer altogether.
Disney+ has confirmed that its ad-supported tier will be launching at the end of this year. It will launch initially in the US on the 8th of December, before rolling out internationally through 2023. The cost of the service’s ad-free option will increase to $10.99 per month and the ad-supported monthly subscription will be $7.99 per month. Disney has said it will aim for an average of four minutes of advertising per hour.
The new ad-supported streaming subscription at Netflix is likely to launch early in 2023. Pricing has not been announced yet, but the company has said that the ad-supported price point will be lower than its most popular ad-free plan, currently $15.49 a month in the US. Unlike Disney, which owns the rights to the content it streams, Netflix is likely to have to negotiate payment deals with content providers if it runs advertising in their productions.
In a statement, Netflix said:
Over time, our hope is to create a better-than-linear-TV advertisement model that’s more seamless and relevant for consumers, and more effective for our advertising partners.
