Recent strategies employed by Disney suggest a shift in focus towards attracting higher-value customers. If Netflix's achievements are any indication, Disney might soon experience similar advantages.
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GLODisney seems to be taking inspiration from Netflix’s playbook when it comes to pricing and subscriptions.
In its Q3 2023 earnings presentation, Disney unveiled its intentions to raise monthly fees for Disney+ and Hulu, take a stricter stance on password sharing, and develop a super app for content. These decisions are being made despite a decrease in the number of subscribers to the Disney+ streaming service in the fiscal third quarter.
CEO Bob Iger, reported: “We see a future where consumers can access even more of the company’s streaming content all in one place,” he said, “resulting in higher user engagement, lower churn, and greater opportunities for advertisers.”
Although many might assume that raising subscription rates could lead to further subscriber attrition, Netflix’s successful crackdown on password sharing contradicted this notion. Instead, Netflix has focused on catering to its higher-value customers who have willingly subscribed or continue to use the service even after the ease of password sharing has diminished. Disney could be adopting a similar strategic approach.
Research by PYMNTS suggests that prioritizing these higher-value consumers could potentially lead to greater long-term profitability.
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The lifetime value of a subscriber varies significantly based on their subscription duration, with long-term subscribers generating almost $2,000 more than the average subscriber and approximately $4,000 more than short-term customers. Attracting consumers with an annual income exceeding $100,000 is crucial, as their average lifetime spending of $3,500 surpasses the sample average by nearly $1,000, likely due to their increased disposable income.
Regarding generations, bridge millennials exhibit the highest subscription spending, with an average lifetime expenditure of $3,200. This trend could be attributed to the convenience that subscriptions offer during this life stage. Further research by PYMNTS reveals that 76% of individuals within this age group live with a partner. Additionally, considering their approximate age range of 35 to 45, many of them may also be raising children.
Recent strategies employed by Disney suggest a shift in focus towards attracting higher-value customers. If Netflix’s achievements are any indication, Disney might soon experience similar advantages.
Source: PYMNTS
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