Disney Moves Aggressively into Streaming. Could It Miss Out on New Audiences?

Sam Blake

Sam primarily covers entertainment and media for dot.LA. Previously he was Marjorie Deane Fellow at The Economist, where he wrote for the business and finance sections of the print edition. He has also worked at the XPRIZE Foundation, U.S. Government Accountability Office, KCRW, and MLB Advanced Media (now Disney Streaming Services). He holds an MBA from UCLA Anderson, an MPP from UCLA Luskin and a BA in History from University of Michigan. Email him at samblake@dot.LA and find him on Twitter @hisamblake

Disney Moves Aggressively into Streaming. Could It Miss Out on New Audiences?

Disney now has over 137 million subscribers to its streaming platforms, including Hulu and ESPN+ — and it's about to boost its original content on its flagship service, Disney Plus.

The company announced plans to add 10 Star Wars series and 10 Marvel series to that service over the next few years, along with 15 new series from its Live Action, Animation and Pixar divisions, and 15 feature films from those divisions. In total it plans to add over 100 new titles to Disney Plus each year.


In the U.S., the price of the service will increase by a dollar to $7.99 starting in late March. Existing subscribers will have a six-month delay on the hike.

Disney will debut "Disenchanted," "Sister Act 3" and a live-action "Pinnochio" starring Tom Hanks as Disney Plus exclusives. "Raya and the Last Dragon," which had been planned for theaters, will now premiere on the streaming service in addition to theaters and "Black Widow," the expected Marvel blockbuster starring Scarlett Johansen, remains slated to debut exclusively in theaters in May.

Disney execs had been somewhat quiet about the company's strategic vision and encouraged listeners to wait for December 10th. CEO Bob Chapek told investors last month, "you're going to see [then] that we're going to put a lot of wind in the sails of our Disney Plus business."

That was before Warner Bros. announced that it would blow a gale of its own into its own streaming service by saying it would release its entire 2021 slate of 17 films simultaneously in theaters and on HBO Max, where they will remain for one month. Before that, Universal decided to make "Trolls World Tour" available for on-demand digital rental, rather than adhering to the long-sanctified theatrical window, which historically has given cinemas a 60-90 day period of exhibition exclusivity.

When Disney launched Disney Plus in November 2019, it anticipated its subscribers would grow to between 60 and 90 million by 2024. Thanks in no small part to the pandemic, Disney Plus has obliterated that forecast. As of December 2nd, Disney Plus had 86.8 million subscribers, the company announced Thursday. It's now re-evaluated that outlook, aiming to grow to 230 million to 260 million subscribers, including its international platforms, by 2024.

That rapid progress has encouraged a corporate reorganization to focus on streaming, as well as the suspension of the company's dividend payment, to the delight of some activist investors who had called for Disney to invest more in streaming.

Disney Plus Is Shining, but It's Not the Only Star

Disney's streaming services now have over 137 million subscribers when you figure in Hulu (38.8 million subscribers) and ESPN+ (11.5 million). For comparison, it took Netflix seven years from the launch of its streaming service to surpass 100 million subscribers.

As to whether Disney's plans to shift films away from the big screen and onto its streaming platform are short-term only, head of distribution and monetization Kareem Daniel, who recently took that role as part of the corporate reorg, said the company will keep its options open.

"We will continue to shift and optimize according to what is best for the consumer and our business," he said.

To expand its streaming reach internationally, Disney will be riding its Star brand, which the company acquired when it bought Fox in 2019. Now, Disney is expanding its Star-branded offering with two separate strategies – which will include price hikes. In Europe, Canada, Australia, New Zealand and a few other markets, Disney will integrate Star into its Disney Plus app, adding a variety of more broadly-appealing "general entertainment" offerings, including local content for each market. The move will come with a price increase, however: up two euros to €8.99 in Europe, and similar increases elsewhere.

In Latin America, where Disney launched Disney Plus in November, Disney will roll out a separate app, Star Plus in June. It will offer local content and sports, including ESPN.

Bob ChapekDisney CEO Bob Chapek at Thursday's "Investor Day" conference.

In the U.S., Hulu and ESPN+ will remain separate apps, also available as a bundle with Disney Plus – which will see a $1 price increase as well, to $13.99 – and play the role of fulfilling that broader-appeal strategy. Disney also announced a newer bundle, which includes Hulu without ads, for $18.99.

In sum, it's full speed ahead for Disney's ongoing transition from a widely recognized brand with an entrenched value proposition into a fully fledged growth company. Investors seem to like it. Wells Fargo analyst Steven Cahall has suggested that Wall Street is willing to shift its approach to Disney, prioritizing growth metrics like subscriber counts over more traditional measures of profitability.

By the end of November, the company reached a record-high stock price. In after-hours trading on Thursday, it reached a new all-time high of $160.21, up over 3% from the market's close.

It's a rosy picture right now, but questions linger about the longer-term consequences of Disney's aggressive shift to streaming.

Will the Bet on Disney Plus Pay Off?

In the near-term, with theaters and theme parks closed or operating at limited capacity, it makes sense for Disney to shift content to its exclusive platform; Wall Street obviously approves. That shift, and the broader prioritization of streaming on its exclusive platforms, comes with an important trade-off, however. On its exclusive platforms, Disney's franchises and characters reach fewer people compared to more broadly distributed channels like cable and movie screens.

Exposing fans to Disney's storytelling is the essence of the company's business. Fan affinity to cute, anthropomorphic creatures, cinematic universes like Star Wars and Marvel, and Disney's seemingly endless trove of characters that pull on kids' heartstrings and parents' wallets all drive purchases of other Disney products, including merchandise, theme park tickets and hotel and cruise line reservations. This strategy has been heralded by some analysts as "Disney as a Service."

The gamble with a shift to streaming is that the loss of essentially unlimited reach through traditional channels will be offset by the value that comes with the more targeted capabilities of a direct-to-consumer strategy. By knowing precisely what customers click on and when, across all of Disney's assets, the company hopes to be able to squeeze more money out of its high-affinity customers. Or, as Kareem Daniel put it, Disney's "numerous consumer touchpoints" will provide "insights to optimally engage" consumers with the "goal to maximize audience engagement and commercial impact."

The bet on direct-to-consumer streaming is that the sacrifices Disney is making – less money from licensing its content and from the box office and its TV networks, investment into its exclusive DTC platforms, and the reduced reach that comes with that – can enable the company to more effectively transform the love and affinity its stories create into dollars.

One potential consequence: If Disney subscribers grow to expect content on its streaming services that the company is not planning to deliver on a sustained basis once the pandemic subsides, Disney risks disappointing them down the road, which may lead them to look elsewhere. After all, there are plenty of other services; it's not for nothing that they call it a streaming war.

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Sam Blake primarily covers entertainment and media for dot.LA. Find him on Twitter @hisamblake and email him at samblake@dot.LA

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🤠Musk Picks Texas and 🔥Tinder AI Picks Your Profile Pictures
Image Source: Tinder

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Tinder is altering dating profile creation with its new AI-powered Photo Selector feature, designed to help users choose their most appealing dating profile pictures. This innovative tool employs facial recognition technology to curate a set of up to 10 photos from the user's device, streamlining the often time-consuming process of profile setup. To use the feature, users simply take a selfie within the Tinder app and grant access to their camera roll. The AI then analyzes the photos based on factors like lighting and composition, drawing from Tinder's research on what makes an effective profile picture.

The selection process occurs entirely on the user's device, ensuring privacy and data security. Tinder doesn't collect or store any biometric data or photos beyond those chosen for the profile, and the facial recognition data is deleted once the user exits the feature. This new tool addresses a common pain point for users, as Tinder's research shows that young singles typically spend about 25 to 33 minutes selecting a profile picture. By automating this process, Tinder aims to reduce profile creation time and allow users to focus more on making meaningful connections.

In wholly unrelated news, Elon Musk has announced plans to relocate the headquarters of X (formerly Twitter) and SpaceX from California to Texas. SpaceX will move from Hawthorne to Starbase, while X will shift from San Francisco to Austin. Musk cited concerns about aggressive drug users near X's current headquarters and a new California law regarding gender identity notification in schools as reasons for the move. This decision follows Musk's previous relocation of Tesla's headquarters to Texas in 2021.

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Top LA Accelerators that Entrepreneurs Should Know About

Los Angeles, has a thriving startup ecosystem with numerous accelerators, incubators, and programs designed to support and nurture new businesses. These programs provide a range of services, including funding, mentorship, workspace, networking opportunities, and strategic guidance to help entrepreneurs develop their ideas and scale their companies.


Techstars Los Angeles

Techstars is a global outfit with a chapter in Los Angeles that opened in 2017. It prioritizes local companies but will fund some firms based outside of LA.

Location: Culver City

Type of Funding: Pre-seed, early stage

Focus: Industry Agnostic

Notable Past Companies: StokedPlastic, Zeno Power


Grid110

Grid110 offers no-cost, no-equity programs for entrepreneurs in Los Angeles, including a 12-week Residency accelerator for early-stage startups, an Idea to Launch Bootcamp for pre-launch entrepreneurs, and specialized programs like the PledgeLA Founders Fund and Friends & Family program, all aimed at providing essential skills, resources, and support to help founders develop and grow their businesses.

Location: DTLA

Type of Funding: Seed, early stage

Focus: Industry Agnostic

Notable Past Companies: Casetify, Flavors From Afar


Idealab

Idealab is a renowned startup studio and incubator based in Pasadena, California. Founded in 1996 by entrepreneur Bill Gross, Idealab has a long history of nurturing innovative technology companies, with over 150 startups launched and 45 successful IPOs and acquisitions, including notable successes like Coinbase and Tenor.

Location: Pasadena

Type of Funding: Stage agnostic

Focus: Industry Agnostic, AI/Robotics, Consumer, Clean Energy

Notable Past Companies: Lumin, Coinbase, Tenor


Plug In South LA

Plug In South LA is a tech accelerator program focused on supporting and empowering Black and Latinx entrepreneurs in the Los Angeles area. The 12-week intensive program provides early-stage founders with mentorship, workshops, strategic guidance, potential pilot partnerships, grant funding, and networking opportunities to help them scale their businesses and secure investment.

Location: Los Angeles

Type of Funding: Pre-seed, seed

Focus: Industry Agnostic, Connection to South LA and related communities

Notable Past Companies: ChargerHelp, Peadbo


Cedars-Sinai Accelerator

The Cedars-Sinai Accelerator is a three-month program based in Los Angeles that provides healthcare startups with $100,000 in funding, mentorship from over 300 leading clinicians and executives, and access to Cedars-Sinai's clinical expertise and resources. The program aims to transform healthcare quality, efficiency, and care delivery by helping entrepreneurs bring their innovative technology products to market, offering participants dedicated office space, exposure to a broad network of healthcare entrepreneurs and investors, and the opportunity to pitch their companies at a Demo Day.

Location: West Hollywood

Type of Funding: Seed, early stage, convertible note

Focus: Healthcare, Device, Life Sciences

Notable Past Companies: Regard, Hawthorne Effect


MedTech Innovator

MedTech Innovator is the world's largest accelerator for medical technology companies, based in Los Angeles, offering a four-month program that provides selected startups with unparalleled access to industry leaders, investors, and resources without taking equity. The accelerator culminates in showcase events and competitions where participating companies can win substantial non-dilutive funding, with the program having a strong track record of helping startups secure FDA approvals and significant follow-on funding.

Location: Westwood

Type of Funding: Seed, early stage

Focus: Health Care, Health Diagnostics, Medical Device

Notable Past Companies: Zeto, Genetesis


KidsX

The KidsX Accelerator in Los Angeles is a 10-week program that supports early-stage digital health companies focused on pediatric care, providing mentorship, resources, and access to a network of children's hospitals to help startups validate product-market fit and scale their solutions. The accelerator uses a reverse pitch model, where participating hospitals identify focus areas and work closely with selected startups to develop and pilot digital health solutions that address specific pediatric needs.

Location: East Hollywood

Type of Funding: Pre-seed, seed, early stage

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Disney Accelerator

Disney Accelerator is a startup accelerator that provides early-stage companies in the consumer media, entertainment and technology sectors with mentorship, guidance, and investment from Disney executives. The program, now in its 10th year, aims to foster collaborations and partnerships between innovative technology companies and The Walt Disney Company to help them accelerate their growth and bring new experiences to Disney audiences.

Location: Burbank

Type of Funding: Growth stage

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Notable Past Companies: Epic Games, BRIT + CO, CAMP


Techstars Space Accelerator

Techstars Space Accelerator is a startup accelerator program focused on advancing the next generation of space technology companies. The three-month mentorship-driven program brings together founders from across the globe to work on big ideas in aerospace, including rapid launch services, precision-based imaging, operating systems for complex robotics, in-space servicing, and thermal protection.

Location: Los Angeles

Type of Funding: Growth stage

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🚁 One Step Closer to Air Taxis in LA
Image Source: Joby Aviation

🔦 Spotlight

Joby Aviation, a pioneering electric air taxi company, has achieved a significant milestone by successfully flying a hydrogen-electric aircraft demonstrator for 523 miles with only water as a byproduct. This groundbreaking flight showcases the potential for emissions-free regional travel using vertical take-off and landing (eVTOL) aircraft, eliminating the need for traditional runways. The company's innovative approach combines its existing battery-electric air taxi technology with hydrogen fuel cells, paving the way for longer-range, environmentally friendly air travel.

For LA residents, this development holds exciting implications for future transportation options. Joby's technology could potentially enable direct flights from LA to destinations like San Francisco or San Diego without the need to visit conventional airports, offering a cleaner and more convenient alternative to current travel methods. The company's progress in both battery-electric and hydrogen-electric aircraft positions it at the forefront of next-generation aviation, promising to revolutionize urban and regional mobility.

Notably, Joby Aviation has already made strides in Southern California by securing an agreement with John Wayne Airport earlier this year to install the region's first electric air taxi charger. This strategic move sets the stage for LA to be among the initial markets where Joby will launch its electric air taxi service. With plans to commence commercial operations as early as 2025 using its battery-electric air taxi, LA residents may soon have access to a fast, quiet, and environmentally friendly mode of transportation that could significantly reduce travel times and traffic congestion in the region. In the not too distant future, LA might find itself in an identity crisis without traffic and excess smog 🤞🤞.


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