Disney Makes Strategic Moves to Be ‘Most Powerful Force’ in Streaming Industry

At Disney’s Upfront presentation to potential advertisers last week, the company’s CEO Bob Chapek said that he believes that Disney is “the most powerful force in the industry.” While whether he was speaking about the TV industry specifically or the entertainment industry at large might factor into whether you agree with his assessment or not, there is no doubt that after launching ESPN+ in April 2018 and Disney+ in November 2019 — not to mention consolidating its ownership of Hulu in March 2019 thanks to its acquisition of 21st Century Fox — the past four years have turned the House that Mickey Built into one of the biggest players in the streaming space in a relatively short period of time.

When the company reported its latest subscriber totals earlier this month, it revealed that when combining Disney+’s 137.7 million global subscribers with the 45.6M of Hulu and 22.3M from ESPN+, the company is currently at 205 million subscribers, just 16M shy of Netflix’s now precarious total. Of course, those totals are a bit artificially inflated thanks to subscriber overlap provided by the Disney Bundle, but they represent an impressive number nonetheless reaching roughly three out of every five streaming viewers.

To keep up with its growing base’s need for new content, Disney plans to increase the amount of money that it spends on original programming by 93% by 2025. Last week the company announced that it had cut its 2022 fiscal year content spend from the previously announced $33 billion to $32 billion, with one-third being dedicated to live sports right. Given those totals, that would mean that Chapek and company plan to spend $61.76B on content alone by 2025; an absolutely eye-popping number.

While that won’t all be focused immediately on streaming — and an increasingly large portion will undoubtedly go to sports — given the importance that Chapek has placed on the streaming space recently, whether the content originates on streaming or ends up there in short order it is essentially guaranteed to be on one of Disney’s streaming services eventually.

One reason that it seems that Disney is focusing on generating more content for eventual streaming is that its flagship service Disney+ is readying to launch an ad-supported tier later this year. Hulu is already the No. 1 ad-supported streamer appearing in 45% of all
 connected TV (CTV) households. According to Disney, Hulu reaches 115 million ad-supported viewers monthly which marks a 59% increase since 2019.

The dual-income streams of low-priced subscriptions and ad revenue is believed to be a way for streamers to counter subscriber saturation and eventual cancelations. However, while billions will continue to be spent on advertising for years to come (until it inevitably reaches the trillion-dollar level) fears of an impending recession have soured some on the prospects of relying too heavily on brand advertisers.

Fortunately, the one bit of programming that has been consistent across decades and platforms is sports. And while ESPN has long called itself “the worldwide leader in sports,” the family of networks is backing it up with over 75,000 hours of live events, including an increased investment in women’s sports.

From expanded WNBA postseason coverage to the new partnership with Athletes Unlimited's softball league to 15 NCAA Women’s Championships, the network seems to have heeded the call to invest in women. ESPN has also recently launched W Studios which will focus on telling compelling stories about women athletes that go beyond the on-court/field action.

On the streaming side of the equation, the network’s efforts to get back into the business of broadcasting hockey have paid off as the NHL has become the most-watched content on ESPN+, accounting for 20% of all minutes watched during the season.

In addition to select NHL, MLS, and MLB games, ESPN’s streaming service will also air its first exclusive NFL game this October when the Denver Broncos and Jacksonville Jaguars take to the field in London’s Wembley Stadium.

While Chapek teased earlier this month that an ESPN super streaming service complete with all of the network’s linear offerings would be coming eventually, that is likely still a ways away. However, when Disney does bring that to market — either as a standalone or as part of ESPN+ or Disney+ — that will further solidify the company’s standing as a dominant streamer.

In the meantime, Disney is continuing to flex its sizeable muscles as it slowly, but surely eats away at Netflix’s once insurmountable streaming advantage.