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Disney+ Reports 94.9 Million Subscribers, but IP Mining Is Not Enough to Beat Netflix

Yes, people love "WandaVision." But Disney knows it needs to pump money into Hulu and Star in order to beat Netflix.

Wandavision Episode 5 Elizabeth Olsen Paul Bettany

Elizabeth Olsen and Paul Bettany in “WandaVision”

Courtesy of Disney+

Disney’s Q1 earnings call February 11 reported 94.9 million global customers for Disney+ as of January 2. In just over a year since the service launched, Disney+ has surpassed the company’s four-year goal of nabbing 90 million subscribers. Great news, but it distracts from a bigger truth: Mining classic-Disney IP for the latest Disney+ show won’t be the thing that beats Netflix.

The numbers mark a bright spot in financial performance that has been marred by the pandemic. The news coincided with the company’s first quarterly profit, $17 million, after a string of losses in 2020.

It all suggests that Disney’s obsessive focus on Disney+ is working. Theatrical exhibition and linear channels like the company’s own ABC are now so-called “legacy” platforms, and run second to direct-to-consumer platforms Disney+, Hulu, and ESPN+ as part of what CEO Bob Chapek referred to as a “DTC-first business model.”

CFO Christine McCarthy said content is the single-biggest driver in acquiring and retaining subscribers. And the company plans to spend big on content: $14 billion-$16 billion on all streaming platforms over the next three years, a figure announced during December’s four-hour investors extravaganza that teased over 100 moves and series in the works.

Netflix spends a similar amount on its programming, but Disney has what Netflix doesn’t: IP.

“A wealth of IP from our unrivaled collection of brands and franchises provides us with an incredible breadth and depth of storylines and characters to mine for Disney+ and our other streaming services,” Chapek said. “We have the ability to interconnect these storylines and characters in unprecedented ways.”

Early Disney+ numbers were built on the appeal of “The Mandalorian.” Now the “Star Wars” universe  is spawning another spinoff, a Boba Fett series set to launch on Disney+ in December. The first Marvel series, “WandaVision,” launched in January to acclaim for its oddball mix of classic-TV homage with Marvel favorites.

Disney IP is also fueling rides based on “Ratatouille” and “Guardians of the Galaxy” that will soon be unveiled at the company’s parks, as is a “Star Wars” hotel and a Marvel-themed section. But as with natural resources, IP can’t be mined forever or at the same rate of return.

Disney is careful not to miss any opportunity to create the latest franchise. “Black Panther,” lauded for its originality and elevation of the MCU when it was released for 2018, will become a Disney+ fixture with a series set in Wakanda.

While audiences haven’t hit franchise fatigue with the MCU (the fourth Avengers movie, released in 2019, still holds the box-office record), it’s a future possibility.

While Disney+ content does get most of the press attention, 30 percent of all Disney+ subscribers are subscribers of India’s Disney+ Hotstar, which offers access to the country’s wildly popular cricket league.

On February 23, Disney will launch another service, Star, across Europe, Canada, Australia, New Zealand, and Singapore as a Disney+ add-on. Think of it as the global equivalent to Hulu: It will feature thousands of hours of movies and TV, including content from the Fox acquisition and local programming. The big difference is Star will be accessed through Disney+.

Stateside, Disney continues to invest in Hulu. Early Oscar contender “Nomadland” will premiere February 19 day-and-date on the service and in theaters.

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