We're less than three weeks from the launch of Disney's (DIS 0.16%) new premium streaming service, and the media giant is leaving no stone unturned in making sure Disney+ is an audience magnet right out of the gate. Verizon Communications (VZ 0.90%) announced this week that it will be giving some of its customers a one-year trial to Disney+. This is the media giant's latest move to lock in new users before the digital platform goes live on Nov. 12.
The wireless carrier won't be making the freebie available to all of its 93.9 million wireless retail connections. The one-year offer is only going out to its unlimited wireless customers, as well as new Fios Home Internet and new 5G Home Internet accounts. The move should still bring millions of new accounts to Disney's new service, helping the House of Mouse make up for its late entry into this booming niche.
Image source Disney.
There's a great big beautiful tomorrow
Verizon will be the exclusive provider of 12 months of Disney+ at no additional cost -- and it makes sense. AT&T (T 1.10%) is the only other carrier close to Verizon in terms of wireless customer count, and there's no way Disney would be warming up to the telco behemoth that now owns rival Time Warner. Disney+ will compete with AT&T's HBO Max when it launches in a few months.
This week's deal with Verizon isn't the first time that Disney has tried to lock in Disney+ subscribers for the long haul. In recent weeks, we've seen Disney offer members of its D23 fan club, credit card accounts, and theme-park annual pass holders the ability to prepay for two, and in some cases three, years of service at a deep discount.
Disney's aggressive approach goes along with its already generous pricing of $6.99 a month, which is a little more than half of what the market's leading service is charging for its most popular plan. It's also less than half of the likely pricing of HBO Max, which is highly unlikely to be offered as a freebie for AT&T customers since it would disrupt the market for longtime HBO subscribers.
Disney knows what it's doing. Traditional TV viewing is migrating online, and Disney would rather control the experience than license its content to third-party platforms. It can't afford to fail, and that's why offering many Verizon customers access for a year is a smart -- if not desperate -- way to build an instant audience for a service before it even launches.
The downside for investors is that all of these free and discounted long-term trials will blur the success of Disney+. We'll have to wait as long as three years to see if renewal rates at retail prices hold up to gauge market demand.
For now, Disney is doing the right thing. It's drawing a crowd for a platform that it needs to succeed if it wants to change the "cord-cutter" narrative that's been holding back investor interest in its media networks segment. It's a strong first act, but we still don't know if people will stick around after the intermission.
