Disney announced this week that its new streaming service of Disney+ has crossed 50 million paid subscribers just five short months after launching. While obviously helped by the sheltering-at-home of millions of people around the world during the coronavirus pandemic, it’s still an astonishing success.
But why does this subscriber count matter? First, it shows that the streaming business is thriving especially in this current environment where at-home entertainment is increasingly valuable. It’s likely that Netflix will report a great quarter as well. What will be interesting is to see how poorly the cable TV segment did. When Disney reports on May 12, we should get an updated look at ESPN subscriber counts which is considered a major barometer of the secular cable TV decline. Without live sports recently, it’s possible that those numbers are extremely ugly. In fact, the previous quarter, “cord cutting” accelerated to its fastest decline yet.
The other reason this development is potentially very interesting is that it might hasten Disney’s move away from the box office and focus strictly on its Disney+ streaming product. While profits from the box office have been huge in recent years for Disney, they’re trying to essentially play both sides here. They want to look to the future of Disney+ while maintaining profits in legacy businesses as much as possible.
Well, the coronavirus has probably sped up this move. Movie theaters are in a decline and are now shutdown for all intents and purposes. Meanwhile Disney has either moved back its major film releases or put them straight to Disney+.
With 50 million subscribers and growing, Disney might be more confident in abandoning the traditional film release business and put these movies straight to its Disney+ service and approach the business more closely to how Netflix does. Imagine if you HAVE to have Disney+ in order to see the next Star Wars movie or Mulan or the next Marvel huge hit? Disney+ subscribers would continue to grow wildly. Either way, so far so good for Disney’s streaming service.