How Disney plans to use streaming to turn you into a full-on Disney addict

By: Hank Molski

No, Disney+ prices aren’t introductory – these are gateway prices

Thursday was a significant day in the history of the Walt Disney Company, as CEO Bob Iger and team rolled out detailed plans for the long-awaited Disney+ streaming service at the company’s investor day.

The service will launch on November 12 in the United States, drawing on its deep catalog of content and offering up new shows featuring favorite characters from Monsters Inc. to Marvel to Star Wars. The service will cost subscribers $6.99 per month, or $69.99 per year.

“Today’s presentation will show you where we’re going, but also remind you that we are starting from a position of strength and optimism,” said Iger on stage Thursday.

A sample of Disney+’s interface.

The announcement of Disney+ prices sent a shockwave through the internet on Thursday evening and into Friday morning – with many (over-enthusiastic) internet commenters claiming that Netflix and other streaming services were shaking in their boots. Another large swath of opinions stacked up to claim that the Disney+ pricing rollout was merely an introductory price – but we have some other ideas here.

Disney+ pricing is, dare we say, “cheap.” Taking the annual fee down to a monthly look-in – it’s less than $6.00 a month to have the full Disney Intellectual Property library at your fingertips. To get this same level of access (in HD) for Netflix, it’s more than double the price. And with Netflix today, you’re currently getting quite a few pieces of Disney-owned content. That won’t be there soon.

No, we’re not saying that Disney will keep these prices locked in for decades to come, but we also don’t think this pricing model is built to “lock in subscribers” and “jack up the price.” We suspect that prices will mostly reflect inflation. Disney said loud and clear Thursday how badly they want you to buy their streaming service. And it’s aggressive.

Content from FOX (all 30 seasons of The Simpsons at launch), National Geographic (Free Solo on Day 1), Marvel (with hit blockbusters and original series), Star Wars (original series and all nine films), Pixar (every movie) and the unlocked Disney Animation Library vault is just the beginning of this massive shift in the media landscape. Think of how this will grow in years to come.

But here’s where it gets interesting. Disney is set to give you this library at a nominal fee because they’re shifting the way they view a customer lifecycle. Getting someone to convert and purchase their streaming service isn’t the end of a sales cycle… it’s only just the beginning.

What follows with the purchase of a Disney+ subscription is a full-on Disney content addiction. That TV in your living room or that iPad in your child’s hand is going to be rolling with fresh Disney content for the next decade… because those prices just don’t get better.

So what comes next?

Surely, your family of four can’t miss the premier of the next big Marvel movie right? (Especially when Fantastic Four and X-Men get added to the fold.) There goes $60-$80 in movie tickets right there. And who knows how many times a year that is going happen? Each trip to the theater is more than a full year of Disney+ alone. That’s where Disney wants to convert!

And it doesn’t stop there. Next comes merchandise. Apparel. Toys. Collectibles. For every franchise. And this stuff costs far more than a movie ticket. Now add that up. Another spot for Disney to convert on its intellectual property.

Now… the big one. For your Disney-obsessed family. The family with Disney+ streaming hundreds of hours a month of content, decked head-to-toe in Disney gear and at the premiere of every big new movie… where do you go to live your dream? Parks.

Disney has lured you into their most profitable arm. Their most successful division. And the most expensive for the customer by a long, long way. We’re talking about thousands of dollars a trip here. This is where the big bucks fold into the Walt Disney Company. This is where they want you. $5.80 a month for streaming doesn’t look so bad when you’re set to spend $6 on a large Coke in the parks, right? There’s a reason Disney just spent more than $2 billion to get new Star Wars-themed lands up and running. They’re hooking you in.

And when people talk about price hikes once you’re hooked – they’re not entirely wrong. It’s going to happen here, in the parks. Not on your streaming service. We see it every few months. Fifteen to twenty percent price hikes are happening almost annually. And flexible pricing dates just opened up the floodgates on the ease at which Disney can gently turn up the heat on their park prices.

Disney+ is the gateway. Disney’s empire lies just behind those seven-dollars-a-month doors.

The new Disney lifecycle has been built. It’s a Disney World… and we’re all just living in it.  

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