Losses in the streaming business: Disney saves on films and series

Losses in the streaming business: Disney saves on films and series

US actor Samuel Jackson plays veteran agent Nick Fury in the latest Marvel series Secret Invasion. The streaming provider Disney + has designed its own series for the comic character. But it mostly fell through with critics and fans. Rotten Tomatoes ranks it as the worst-rated Marvel show to stream on Disney+.

Disney has pumped millions into the development of exclusive shows from the Star Wars and Marvel universes in recent years. “Loki”, “WandaVision”, “MoonKnight” or “Hawkeye” were created for the Marvel brand alone – all stories about more or less well-known Marvel superheroes.

“Focus and attention diluted”

Disney boss Bob Iger said in an interview with CNBC that the zeal may have been a bit great. “Marvel wasn’t that big on TV before, there weren’t just a lot more movies, there were a lot of new shows too. It honestly diluted the focus and attention.”

This has consequences for the Star Wars and Marvel brands. Iger announced that they would soon be producing less and spending less money on it.

The prices are rising

This measure is intended to compensate for the immense losses of the Disney + streaming platform. Last year, the platform lost more than $1 billion. After all, Disney was able to roughly halve its losses in the past quarter. Despite this, the model is still unprofitable.

“Disney has poured billions into streaming, and Disney wants to change that by raising prices and giving consumers an alternative subscription with advertising,” said entertainment reporter Alex Weprin at CBS. “It’s cheaper, but the company can recoup that with advertising.”

Shrinking media library

Soon, the ad-free version of Disney+ will cost $13.99 a month in the US, twice as much as it did when it was launched in November 2019. The company also wants to take stricter action against the sharing of passwords. Disney is using a similar strategy to Netflix: the competitor has also increased its prices and wants to prevent the sharing of an account among several households.

Another savings measure at Disney +: Dozens of less popular films and series have been removed from the platform, for example to save on license costs. However, this also reduces the Disney + media library.

So far, this hasn’t meant that customers have turned their backs on Disney+, says Weprin: “Very few people quit – but companies are starting to worry a little more, because at some point people won’t pay for four or five platforms anymore. More like two or three.”

Profit instead of growth is the motto

Considering how new the Mickey Mouse group’s streaming service actually is, it has been able to gain many subscribers in a short time. There are now a good 106 million. Although Netflix has more than twice as many, it has been in the streaming business for much longer.

Disney is now in third place behind Amazon Prime Video. Wall Street has always rewarded growth, but times have changed, says CNN media journalist Frank Pallotta. It is now less about rapid growth and more about profit.

According to CEO Iger, Disney+ could be in the black by 2024 at the earliest – the longtime Disney boss was actually almost retired and was probably reinstated as Disney managing director because of the crisis. That too is probably a strategy to stabilize the swaying giant. Disney also laid off around 7,000 employees earlier this year.

Actor strike could increase costs

A problem for Disney is now the strikes of the screenwriters and actors. The demands of the two unions that represent the filmmakers relate primarily to the streaming platforms: they want more salaries and higher royalties, for example if series or films run several times.

That would increase expenses. Iger already called the demands “unrealistic” and “not up-to-date”. When the current quarterly figures were announced, he backtracked a bit: For Disney, nothing is more important than “relationships with the creative community”. Because: The longer the strike lasts, the more shows and film productions will be delayed – and that too can cost the company millions again.


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