Experts say that changes in Disney’s policy regarding subscription decisions may signal that the company has decided to follow the path of Netflix.
Last week, the entertainment industry giant announced plans to increase the monthly subscription fee for Disney+ and Hulu. The company also announced its intention to begin the fight against password exchange. Another plan of the multimedia industry giant for the future is to create a super application for content. The company intends to implement these solutions, even though in the third fiscal quarter, there was a decrease in the number of subscribers of the streaming service Disney+.
The firm’s CEO Bob Iger spoke about the reasons for the innovations that will take effect in October. According to him, the current concept of the company’s vision of the future provides for the creation of a single digital space in which consumers will be able to access the maximum amount of the brand’s multimedia product. The CEO believes that this solution will increase the level of user engagement, reduce the rate of customer churn and create additional opportunities for advertisers.
Some experts tend to believe that an increase in subscription fees will provoke a decrease in the number of consumers. But the example of Netflix, even if it is not a direct parallel when the tightening of password exchange rules contributed to the growth of the number of customers, refutes this assumption.
Netflix, having made so-called unpopular decisions, was able to focus on interaction with the most valuable users who had registered or continued their consumer presence on the streaming platform even after the actual disappearance of free services. Experts suggest that Disney may begin to act within the framework of a similar strategy, which is indirectly hinted at by the measures planned for October.
Industry studies show that the priority interaction of companies with consumers who agree with changes in financial policy, providing for an increase in customer expenses, contributes to profit growth in the long term. In this case, a very simple economic principle is implemented, which states that from the point of view of the material interest of the business, a smaller number of those who pay more, in many cases, is more beneficial to a larger number of those who pay less.
Also, industry research suggests that the subscription period is often an indicator of the level of material and financial support of the user. For example, the so-called long-term subscribers spend on average almost 2 thousand dollars more than the average customers and 4 thousand dollars more than those who interact with the virtual platform on a short-term basis.
Consumers, whose annual earnings exceed 100 thousand dollars, are the most important social group for business. Their average expenses exceed the sample average.
Among generations, millennials are financially the most active in terms of interaction with subscription-based streaming services.
Disney’s plans for the fall are likely to signal that the company is starting to implement a strategy of predominant interaction with customers who have long-term subscriptions and are ready to increase the costs of related services. Perhaps the firm will repeat the success of Netflix.
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