The streaming market is booming, and the introduction of new platforms has drastically changed the industry's landscape from what it was only two years ago. Disney (DIS 0.16%) has had major success with its streamer Disney+ but had previously entered the market with Hulu and ESPN+. Here's why Disney is right to host and offer a variety of streaming platforms rather than just one.
Tailored entertainment
Hulu launched in 2007 as one of the first ad-supported streaming platforms, with Disney taking control of the streaming service in 2019 due to its Fox acquisition. Disney launched ESPN+ in April 2018 and Disney+ in November 2019.
Each of Disney's streaming platforms offers widely different services. For example, Hulu gives subscribers access to premium TV series and movies, ESPN+ has a wide range of sports content, and Disney+ is home to an extensive library of nostalgic and new Disney titles from brands such as Pixar, Star Wars, Marvel, and more.
Additionally, a recent study showed that consumers are likelier to stay subscribed to a service with no easy substitute, such as Spotify, YouTube, and Crunchyroll. In Spotify's case, 75% of consumers view the music streamer as a must-have versus just nice to have. Anime streaming service Crunchyroll's niche content results in 67% of consumers seeing it as an invaluable subscription. Each of Disney's streaming platforms provides specific content that is difficult to find elsewhere, encouraging consumer retention.
AMC has seen success by offering a variety of streaming platforms with niche content. The company hosts AMC+, which offers several original titles from its own network, horror streamer Shudder, Sundance Now with a large library of indie titles, Acorn TV with British content, and more. In May, AMC's interim CEO Matt Blank said that the "differentiated strategy" has led to "strong consumer loyalty and low churn." As a result, the company reported a gain of 430,000 new paid subscribers in the first quarter of 2022.
Bundles encourage subscriber retention
Offering multiple services allows Disney to bundle its offering for one low price, creating more value and making consumers less likely to drop their subscriptions. In addition, companies such as Apple (AAPL -1.22%) have skillfully used bundles to promote their varying services and increase revenue.
A recent study showed that 33% of people plan to add a new TV subscription in the next six months, while 30% intend to drop one. Subscriber retention is crucial in the streaming market, making bundles increasingly attractive for consumers and companies.
Since the launch of Disney+, the company has offered the service as a part of a bundle in the U.S. alongside ESPN+ and ad-supported Hulu access for $13.99/month -- a 36% discount from using each platform separately. When comparing the bundle to a Netflix subscription, $15.49 gets consumers two simultaneous streams and 1080p picture quality, while the cheapest option is $9.99 for one stream and 480p resolution. Comparatively, the Disney bundle not only gives members access to multiple services but also up to four simultaneous streams and no limitations on resolution.
Meanwhile, Apple bundles its Apple TV+ streaming platform with options such as Apple Music, Arcade, iCloud, Fitness+, and News+. The cheapest tiered bundle provides access to TV+ (4K, six streams), Music (90 million+ songs), Arcade, and 50GB of iCloud storage for $14.95 -- also cheaper and more valuable than Netflix. Services have become a significant part of Apple's business, making up 18% of its business in 2021 and its second-biggest sector after the iPhone.
While combining all of Disney's content under one platform would arguably be easier for the consumer, splitting up services based on interest creates more value for subscribers who can appreciate the low bundled price for three platforms rather than one. It also saves consumers from seeing content that they're either uninterested in or might not be age-appropriate. ESPN+ allows sports enthusiasts to locate the content they want easily, while Disney+ allows parents to be worry-free when their children browse the platform.
What's next for Disney?
Disney+ expanded to 42 additional countries this year, making the total just over 100. However, ESPN+ and Hulu continue to be only available in the U.S. for the most part. If the company can expand those platforms to other markets such as Europe and Asia, Disney will be able to attract more subscribers and offer value through bundling opportunities.
Disney+ already offers a lot of its Hulu content under a section called Star in Europe and Hotstar in other regions. However, live sports is an incredibly lucrative industry in most parts of the world and the introduction of ESPN+ could bring in a flood of subscribers on its own. The sports streamer gained 62% more subscriptions from 2020 to 2021 without being in many countries, proving the power of its content.
