How Disney+ Will Make Money (Eventually)

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Disney is entering the streaming wars this year with the launch of its own service, Disney+, but how is it going to make money? The Mouse House has ambitious plans for its streaming service, with a wealth of original content to complement its already impressive back catalog of movies and TV shows.

This has been a long time coming from Disney, who have long since started the process of removing their content from other platforms, most notably Netflix. The streaming wars are only going to intensify in the next few years as WarnerMedia, NBC Universal, Apple, and many others all try to get a slice of the market that Netflix has had a considerable hold over for most of the decade - but Disney+ is the best placed of them all to do so.

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Related: Every Disney Movie & TV Series Announced At D23 2019

Alongside Disney's own movies, there's also content from Fox now too, and new TV series in the works across major franchises such as Marvel and Star Wars. All of that costs a lot of money, of course, which Disney won't make back immediately, but they do have long-term plans to ensure Disney+ is a financial success.

Disney+ Cost Vs Content: The Best Value Service?

Disney is aiming to hit the ground running with Disney+, which means having a lot of content available either at launch or not long afterward. Within the first year of Disney+, which will become available on November 12, 2019, the Mouse House expects to have 500 films and 7,500 episodes of television available to stream, including multiple original series and films. That will also include not just its already extensive back catalog of Disney classics, MCU movies, and the Star Wars saga, but new releases too. Films like Star Wars: The Rise of Skywalker, for example, are going to be on there within a few months of being in cinemas, and that's on top of its original shows.

Disney has no fewer than seven MCU TV series in the works for Disney+ right now, and four Star Wars shows too. That alone is going to make Disney+ essential for many people, and it comes at a surprisingly low cost. The basic Disney+ subscription is $6.99 per month, with a bundle including Hulu and ESPN+ available for $12.99 p/m. Since the latter price is the starting point for Netflix and Amazon's basic subscriptions, it means that Disney+ is already looking like it'll give subscribers the best possible value for money when considering how much content will be on there.

Disney Is Spending A Lot Of Money On Disney+

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Disney is betting big on Disney+. Making several Marvel and Star Wars TV shows - alongside various other series and movies, including live-action remakes like Lady and the Tramp - costs a lot of money, with the Marvel and Star Wars shows expected to have budgets around the $100 million mark. Disney is planning on spending around $1 billion on original content for Disney+ in 2020, and that's set to increase to around $2.5bn by 2024. That's a lot of cash within a very quick time frame, and doesn't even include everything. When you add in infrastructure and technological costs, marketing, and the loss of revenue from IPs they licensed out, this makes Disney+ a huge financial commitment from Disney.

Related: How Marvel Television Is Evolving & Improving In The 2020s

Disney isn't going to make that back immediately, or even for a few years. This is a calculated risk from the Mouse House, because the streaming wars are essentially adhering to the old adage that you have to spend money to make money. That's why NBCUniversal paid a reported $500 million to have The Office on its own forthcoming streaming service, why WarnerMedia has signed J.J. Abrams & Bad Robot to a $500m deal, and why Netflix paid an estimated $100m to keep Friends on its service just for 2019. Disney is plowing billions into Disney+ upfront, but that's with the intention of getting subscribers in early and enjoying sustained success.

Disney+ Won't Have Ads, But Still Benefits From Them

Like Netflix, Disney+ isn't going to have adverts when it launches, which is extremely important for a streaming service. While audiences are used to ads on regular TV, they're less commonplace in the streaming world, and there'd likely be some pushback if Disney wanted ads on their new streaming service. However, just because Disney+ won't have ads doesn't mean the company overall can't benefit from advertising elsewhere.

Disney+ is being bundled in with ESPN+ and Hulu, and it's the latter that's quite key here. While there is an ad-free version of Hulu, that's not the one being included in the bundle; instead, it's one supported by ads. Nonetheless, the price of the three-way bundle is going to make it a no-brainer for many, including people who might've been on the fence or otherwise not interested in subscribing to Hulu. Those sign-ups are going to boost subscriptions, which in turn is going to massively please advertisers, and increase that as a revenue stream. ESPN+ has only limited advertising, but again if there's a sharp boost in subscribers thanks to Disney+, then the money made from that will increase too. This allows Disney+ to market itself as ad-free, which is a considerable selling point for money, and yet still benefit from ad-revenue.

Disney+ Is A Long-Term Game For Streaming Dominance

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Disney+ isn't going to topple Netflix immediately. According to the latest figures, Netflix has 150 million subscribers around the world, while Disney+ is beginning with a limited rollout that'll include just five countries, meaning it's not going to be the Netflix-killing machine that some have tipped it as - or at least, not straight away. Although Netflix is extremely commonplace, streaming services are still a relatively new technology to many people, and it's going to be a while yet before they become the de facto choice of viewing content across all consumer types.

Related: The Real Reasons Netflix Is Suddenly Losing Subscribers

That's why the streaming wars are heating up now: it's not just about 2019 or 2020, but looking ahead to 2024, 2025, and well-beyond there. If the future is streaming, which it seems to be, then it's good to start preparing for that in the present. Disney+ is very much a long-term plan for Disney. In the short-term, they can boost growth quite rapidly thanks to TV series like The Mandalorian, but they've got MCU series planned until at least 2021. Looking at Marvel's sustained success on the big screen, it isn't difficult to imagine Disney+ doing something similar, except with multiple major franchises, including Fox properties, and an enviable back catalog of movies and TV shows that is only going to get bigger and better.

Disney+ is projected as having 60-90 million subscribers and profitability by 2024; other analysts have suggested Disney could have as many as 130m subscribers across its online platforms by then. Either way, that's a sign of Disney's long-term thinking, with the revenue not coming just from the increased subscribers (which is also going to be made better by taking a chunk of those away from its competition), but that this will increase stock and share value over time too.

Disney+ Isn't As Self-Reliant As Netflix

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One of the reasons Disney+ seems set for sustained long-term success, while many analysts are gloomy about Netflix's own prospects in that regard, is that Disney+ is not self-reliant. Netflix is entirely its own thing: it needs to generate its own revenue, spend its own money, and boost its own subscriber base, and that's only going to become more difficult as the streaming wars go on. Because a big part of Netflix's appeal has been licensed content, then the more that gets taken away, the less content they have, and the more they need to spend on replacing it.

Disney+, on the other hand, is one part of a monolithic company, and Disney doesn't just rely on Disney+ to make money. Instead, Disney+ will play a part in the Mouse House's overall brand synergy. We can see signs of this already in their Marvel shows: Scarlet Witch is appearing in WandaVision and, shortly after, Doctor Strange 2, while the other MCU series are all likely to setup or at least help boost movies in Phase 4 and beyond. In a more abstract sense, The Mandalorian being a hit only serves to strengthen the Star Wars brand, which is better for revenue everywhere from the box-office to merchandise. Disney can advertise Disney+ on ABC; they can promote it at their parks; movies will go from cinema to Disney+. All of Disney's brands can link together and feed one another, which Disney+ is now going to be a big part of (especially in terms of movies and merchandising), thus making it even more valuable to Disney before it's actually started turning a profit itself.

More: Disney Has Just Had Its Worst Week

Key Release Dates
  • Lady and the Tramp (2019) release date: Nov 12, 2019
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