Netflix (NASDAQ:NFLX) completely changed the way we consume television shows. Instead of waiting for a new episode every week, binge-watching three or four episodes, or even an entire season of a series is now a weekly event in many homes. But Disney (NYSE:DIS) and Apple (NASDAQ:AAPL) aren't as on board with binge-watching.

Disney's planning to release episodes for its Disney+ originals on a weekly schedule. Hulu, of which Disney owns a majority share and full operational control, releases three episodes to premiere a series before releasing new episodes weekly. Apple is considering the same release schedule for Apple TV+.

While consumers love to binge-watch, there's a clear strategy in releasing episodes on a weekly basis for Disney and Apple.

The Disney+ logo

Image source: Disney

Feeling the churn

Netflix disappointed investors when it reported a net loss in U.S. subscribers in the second quarter. The company didn't point to competition or its price increase as the reason for its disappointing results. Instead, it said, "We think Q2's content slate drove less growth in paid net adds than we anticipated."

In other words, Netflix's subscriber growth is highly dependent on its release schedule. While management didn't note anything about the impact of its content slate on subscriber churn, it's evident it saw significant churn last quarter as well. It's really hard to lose customers without an uptick in churn.

Releasing episodes over the course of a couple of months can help produce a more stable subscriber base. Prospective subscribers can't just sign up, binge a season, and cancel until the next release. With any luck, Apple and Disney will have a steady pipeline of hit series that keeps subscribers discovering something new by the time the last series run ends. Limiting the availability of new episodes also encourages subscribers to explore what else is available on the services.

Weekly releases may be more important for Disney and Apple than for Netflix. Netflix releases dozens of new original films and series every month. That said, Netflix just started experimenting with weekly releases for some of its shows, including popular hits like the Great British Baking Show.

Disney and Apple won't be spending nearly as much on original content as Netflix. Apple, in particular, won't have a back catalog of content for subscribers to fall back on when they're waiting for the next original, either. So, keeping subscribers coming back to the service on a regular basis is essential to keeping them paying month after month. 

The challenge could get even bigger

As more and more competitors enter the streaming market, it'll become increasingly difficult to keep subscribers from switching between the various outlets for streaming video content. While cord-cutting is growing and consumers are spending more of their money on alternative forms of entertainment like streaming media, many are still budget conscious. It doesn't make sense to subscribe to eight different streaming services at the same time if you're paying more than you were for a cable bundle.

So, Apple, Disney, and new entrants are working to increase switching costs. Netflix does this by releasing copious amounts of new content every month (although even that isn't bulletproof, as we saw last quarter). Amazon, for example, ties its Prime Video service to its Prime shipping service, which keeps subscribers from switching. Disney is offering considerable discounts to consumers willing to commit to a year of the service. It also ran a successful launch promotion that encouraged people to sign up for three years.

Releasing new episodes weekly is just one way to increase switching costs as more competitors enter the market. As they get ready to launch, Disney and Apple will surely experiment with other ways to incentivize subscribers to pay for the next month of service. Stay tuned.