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Disney Rolls Out Promotions Ahead of Disney+ European Launch

By Evan Niu, CFA – Feb 25, 2020 at 7:30AM

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The entertainment giant continues to cultivate long-term, direct relationships with subscribers.

Promotions, bundles, and discounted longer-term subscriptions have played an important role in Disney's (DIS -0.75%) wildly successful launch of Disney+ so far. Pre-sales ahead of the Nov. 12 debut helped the video-streaming service grab 10 million sign-ups on the first day, and the company said that it had 28.6 million subscribers as of earlier this month.

With Disney+ set to launch in Western Europe in about a month, the media and entertainment conglomerate is already rolling out promotions to get a head start.

Disney+ on a TV

Image source: Disney.

Direct, long-term relationships

Disney is now offering a discounted year of service for 50 pounds or 60 euros for customers that sign up before March 24, which translates into approximately $65 based on the exchange rates for both currencies. Compare that to the standard monthly pricing of 6 pounds or 7 euros per month. In the U.S., the House of Mouse offers a one-year Disney+ subscription for $70.

The initial launch of Disney+ included the U.S., Canada, the Netherlands, Australia, and New Zealand. The forthcoming expansion to Western Europe will include the U.K., Ireland, France, Germany, Spain, Italy, Switzerland, and Austria. Since the Netherlands was among the first launch countries, it won't be eligible for the new promotion.

On the earnings call earlier this month, CEO Bob Iger confirmed that Disney+'s average revenue per user (ARPU) was $5.56 during the quarter, compared to the retail price of $6.99. Various discounts available throughout the market are allowing some consumers to "buy in at lower prices." Meanwhile, Disney is cultivating direct relationships with customers like never before, and about half of Disney+ subscribers are signing up directly on the site, where Disney doesn't have to contend with revenue-sharing agreements, according to Iger.

The chief executive added that many customers have subscribed for one- or three-year terms. The promotion that Disney offered last summer for members of D23, Disney's official fan club, included a hefty discount for a three-year subscription.

What's next for Disney+

Following the March 24 launch in Western Europe, the next major market will be India on March 29, ahead of the Indian Premier League cricket season. The blue chip company already owns Hotstar, a popular over-the-top streaming service in India, and it plans to rebrand and bundle that service with Disney+.

"We see this as a great opportunity to use the proven platform of Hotstar to launch the new Disney+ service in one of the most populous countries and fastest-growing economies in the world," Iger said.

Evan Niu, CFA owns shares of Walt Disney. The Motley Fool owns shares of and recommends Walt Disney and recommends the following options: long January 2021 $60 calls on Walt Disney and short April 2020 $135 calls on Walt Disney. The Motley Fool has a disclosure policy.

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