The Walt Disney Economics: Will It Live Happily Ever After?

Aside from producing its own films, Disney acquires significant media companies to further consolidate its market share leadership in the Media and Entertainment industry. Disney is committed to family entertainment so that everyone in the family would have something suitable for them. 

This is demonstrated by Disney's ESPN buyout through its acquisition of Capital Cities/ABC. Under the cable sports networks industry, ESPN is one of the biggest drivers in both revenue and operating income for Disney today, causing Disney to hold a dominant market position across these TV network categories.

Walt Disney Theatrical Market Charts have also shown that out of the Top 10 Grossing Walt Disney Movies from 1995-2022 (adjusted for inflation) four of them are from Marvel superhero stories, three from Star Wars (Lucasfilm), and one from The Incredibles (Pixar), making only two movies from Disney's original production which are Finding Dory and Pirates of the Caribbean - Deadman's Chest. 

Furthermore, Disney's acquisition of 21st Century Fox allows them to grow its content ecosystem with popular titles such as Deadpool and Avatar. Acquiring these companies turned out to be a great idea after all. Disney's market leadership now extends beyond TV networks into movie theaters, theme parks and the current trend, video streaming (Disney+). 

Disney's Involvement in the Streaming Wars: Is It A Zero-sum Game in the Industry?

Other than Disney Plus, companies such as Netflix have also seen a video consumption increase throughout the pandemic. There is a situation in game theory called the "Zero-sum" game in which one person's gain is equivalent to another's loss. Netflix reported that it lost 200,000 of its subscribers in the first quarter of 2022. Does this necessarily imply that their "wealth" is indirectly being transferred to other streaming services, such as Disney+, that are more appealing?

Netflix is losing its subscribers for a reason they can't control: the competition in the streaming arena that has got intense. Basic economic theory demonstrates that when firms have to compete for customers, their strategy can be a form of lowering prices, maintaining quality, or providing a greater variety of options. Disney+ clearly wins the streaming wars price competition. 

It has a subscription plan of $7.99 per month with an offer of $13.99 a month for the Disney Bundle that includes Hulu and ESPN+ while Netflix's basic subscription costs $9.99 per month with one stream at a time, offers $15.49 per month for two simultaneous streams, and $19.99 per month with four simultaneous streams. 

While Disney+ is enjoying its ride along in the back of Marvel Studios and Star Wars shows, some of the qualitative reviews on the internet show an indication that Netflix is also lacking in enticing originals and big franchises.

The Walt Disney Company reported that Disney+ had 137.7 million subscribers worldwide as of its second quarter of 2022. Since the start of the fiscal year in 2020, the services' subscribers base has grown by more than 100 million. The restrictions on theater openings and capacity due to the pandemic has accelerated growth in Disney+ subscribers. 

Films such as Luca turned out to be one of the top streamed films in 2021. This success leads to other Pixar movies like Turning Red to head directly into Disney+. Hence, there can be no causation between Disney+ continued rise in subscription and Netflix's declining subscribers. 

For now, it's safe to say that the numbers of Disney+ subscribers are still on the rise, and to ensure the numbers keep on rising, Disney has to consistently produce and distribute high quality films.