It’s been nearly four years since Disney+ first launched Amsterdam, and since then, the streaming service has launched in more than 150 markets across North America, Europe, Asia/Pacific, Africa, and Latin America.
Launching Disney+ just before the pandemic hit, with a gradual rollout around the world, with billions of people around the world sat at home, meant that the platform was able to explode to over one hundred and sixty million subscribers. But, while Wall Street was once happy with subscriber growth being the most important thing for a streaming service, it soon changed its mind and started to push the streaming services to become more profitable. This as resulted in a huge shift in all of the streaming platforms, as they look to cut costs, increase prices, stop password sharing and reduce originals.
Ever since Bob Iger returned as the CEO of Disney, he has been laser-focused on saving money and sorting out the company’s problems, which includes making its streaming division profitable. This has resulted in some major changes for Disney+, with a huge reduction in original programming, price hikes and the introduction of an ad-supported tier. The international expansion of Disney+ also seems to have been put on hold, as there are still some countries in Asia or Africa without Disney+.
Last year, Disney decided not to bid for the Indian Premier League Cricket rights for Disney+ Hotstar, which was going to cost billions of dollars. However, that decision has resulted in millions of subscribers leaving Disney+. The flip side to this, while it looks bad that Disney+ Hotstar has been losing millions of subscribers, each subscriber in India brings in far less revenue, just 59 cents per month, compared to $7 a month for a US subscriber. So spending billions of dollars on the cricket rights, was deemed too expensive, compared to how much money they made from Disney+ Hotstar. And recently, it was revealed that Disney was even looking into options for what to do with its Indian business, which could involve selling its studios, linear networks or possibly even Disney+ Hotstar.
During this week’s quarterly investors call, Disney CEO Bob Iger was asked about how they are reshaping their international strategy to meet Disney’s long-term profitability objectives, to which Bob replied:
We actually have been looking at multiple markets around the world with an eye toward prioritizing those that are going to help us turn this business into a profitable business. What that basically means is there are some markets that we will invest less in local programming but still maintain the service. There are some markets that we may not have a service at all. And there are others that we’ll consider, I’ll call it, high-potential markets where we’ll invest nicely for local programming, marketing and basically full-service content in those markets.
Basically, what I’m saying is not all markets are created equal. And in terms of our march to profitability, one of the ways we believe we’re going to do that is by creating priorities internationally.
Disney is reviewing all of its businesses to see what is not only generating profit, but if it will bring in more profit down the line. Disney is committed to its movie, theme parks and streaming businesses, but Bob Iger was very clear that things might change in some countries.
Prior to Disney+ launching, Disney would often license out its content to third parties or have their own localised television channels, but as audiences globally have shifted to streaming, so did Disney+, especially in the hunt for subscribers to chase Netflix. Only this past week, Lionsgate announced it was closing down its Lionsgate+ streaming service in Latin America, and both Paramount and Warner Brothers Discovery have scaled back global plans for their streaming platforms.
Ultimately, we are likely to see a reduction in the number of international originals. We’ve seen many new shows and films being created across Latin America, Asia, Europe, Africa and Australasia, but some countries have had many more originals commissioned than others. There are some localised issues that will require Disney to create some originals, but should those legal requirements push too much and require too much investment, there could be some pushback, or we will just see more localised originals made at a much lower cost.
Iger also referenced that they might just pull back on spending money advertising Disney+ in some regions to save money, along with producing fewer local originals, to help keep the platform running in those countries. But, if Disney+ operates in some countries at a loss for too long, it’s very possible that Disney may withdraw the service completely. This is likely to be a last resort, and countries which are profitable for the company, will become more of a priority.
The introduction of the ad-supported tier in Canada and in some European countries indicates where Disney feels it can improve profitability first. Disney announced back in 2019, that it wanted to make Disney+ profitable by 2024, and the recent measures they’ve been making look like this might be possible, but the days of never-ending expansion, hundreds of international originals being commissioned, and low subscription prices are over. Disney+ can’t run at a loss forever, but now it does look like Disney is targetting areas that need improvement, either with cost-cutting or, perhaps, the worst-case scenario, removal of Disney+ from some countries.
Currently, there has been no announcement regarding any closures of Disney+, and this may have just been a warning shot across the company to get things sorted. But Bob Iger could also be setting up shareholders and subscribers for future announcements of closures in underperforming countries.
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Roger has been a Disney fan since he was a kid and this interest has grown over the years. He has visited Disney Parks around the globe and has a vast collection of Disney movies and collectibles. He is the owner of What's On Disney Plus & DisKingdom.