Disney Plus and the Carnivorous Tactics of Generating Revenue Without Creating Value

Recent reports suggest that Disney is restructuring and re-engineering Disney Plus. They have announced: (1) the rollout of an ad-supported tier across Europe, (2) full consolidation of Disney Plus and Hulu, (3) a scaling down of production of content intended for consumption on the Disney Plus platform, and (4) impending removal of unspecified amounts of films and TV shows from the platform. And it’s not good news for anyone. 

Some commentators may suggest that the ongoing WGA strike in Hollywood has influenced Disney’s decision-making process. However, these decisions are not made in response to immediate events and have likely been planned well in advance. The timing of announcing this to the public, on the other hand, is a different matter and for political reasons may have been influenced by external factors, i.e. the WGA strike, but that’s neither here, nor there.  

The impending changes at Disney suggest that the company is adopting a conservative strategy in anticipation of a drop in revenue. This may have negative implications for customers and signal larger industry shifts. I am no expert in this, so I can only invite you to take my own musings with a grain of salt, but given the fact Disney is by far the biggest player in the current landscape of the film industry (and it is only second to Comcast in the grand scheme of the entertainment space, I believe), the way it conducts its business also impacts the behaviour of others. Therefore, it can only be assumed that in the next 12-24 months, others will follow suit (even though Netflix had already blazed the trail in this regard) and you may find ad-supported economy tiers introduced on competing streaming services.  

Consequently, the regular price of what you currently have access to will invariably increase because of being ‘pushed from the bottom’. This is probably the last thing you’d want to hear at a time when every trip to the supermarket ends up more expensive than the last one, even though your trolley is emptier and emptier. The logic of what’s happening seems to be prompted by the fact Disney Plus has recently lost ca. 2.5% of its subscriber base. Now, it is presumably a result of a combination of factors ranging from affordability pressures to believing the available content is no longer worth the expenditure. I wouldn’t even discount politically incentivized quitting on the back of creative decisions made by Disney seen by some people as ‘too’ progressive either.  

Again, what matters is numbers in and numbers out and the response to the fact Disney Plus has been bleeding subscribers is not to invest more, but to invest less. According to Bob Iger, Disney plans to be more careful about investing in new shows and movies that may not generate income or please the audience. However, in the short-to-medium term, we are looking at Disney tightening their belt at your expense. This is because on the back of the introduction of an ad-supported tier on Disney Plus, the regular price will inevitably go up by the end of the year.  

Disney is restricting the supply of its content by storing some material in its ‘vault,’ as it has done in the past.  Compounded by the ever-accelerating shift away from physical media ownership, this may catch quite a few of us completely unawares, because over the years we have been conditioned to expect that some films will always be available to watch somewhere. In fact, for the most part this has always been the case as rights to certain films and TV shows would ping-pong between the major streaming platforms. So, if you had access to Netflix, Amazon Prime and Disney Plus and others (which many people do pay for concurrently), you’d have a good chance of finding what you wanted to watch on one of them.  

Now, this is purely speculative because no announcements have been made as to what exactly Disney is going to remove from their platform and whether the content in question will be licenced by competition; however, it wouldn’t be out of step for Disney to simply pocket what they no longer want to see on their books and let the viewership wait ten years before allowing it out of the vault. After all, people want what they can’t have and the simple fact you are physically unable to watch whatever it is they are going to remove, may artificially inflate its value. In the olden days, this would lead to second-hand DVDs of the movies in question becoming valuable collectors’ items, at least until Disney would announce an anniversary re-release coupled with a short cinematic run to once more democratize the ownership of these movies and TV shows.  

However, times have changed. The physical media market share has been consistently dwindling over the years exactly because people have grown accustomed to the idea of not having to own anything that would clutter their living space. We have been indoctrinated into adopting a subscribe-to-access philosophy and abandoning the tried-and-true buy-to-own manifold, all under the tacit assumption that the rights owners would never constrict the access their customers subscribe to. We have successfully incentivized media distributors not to invest in physical media releases to the extent that certain movies and TV shows are only available as streaming exclusives. For years we have been worrying about this worrying trend, which by the way is an out-and-out monopolization of the entertainment market. We have seen evidence that Disney was quite happy to go in, edit, change and censor their content without ever asking anyone if it’s OK to do so. And now they may be about to normalize constricting supply of available content without giving the viewership any other recourse.  

All to create a revenue without generating anything valuable in the process. It almost looks as though Disney has been taking lessons from property moguls whose entire MO involves keeping the housing supply artificially low and hence artificially inflating the value of existing stock. Or am I seeing things? 


One thought on “Disney Plus and the Carnivorous Tactics of Generating Revenue Without Creating Value

  1. Pingback: Streamer Purges, the Eventual Disappearance of Schlock and Why It Matters | Flasz On Film

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