Is Disney Plus too cheap for the premium brand?

by Nigel Hollis | April 15, 2019

You know, I think I might sign up for Disney’s new streaming service. At $7 a month it seems like a good deal, particularly given my child-like appreciation of Pixar movies. Far from displacing Netflix, Disney Plus seems like a good addition to my video options, and that, surely, is the point of the new service’s price point. But could it be too cheap?

With standard Netflix subscription costing $13, the Disney Plus price seems cheap by comparison. So cheap, that it is widely reported that the audience at the investor presentation gasped  when the price was announced. While Netflix has been on a new content production binge, Disney Plus will bring access to all sorts of content from Pixar to National Geographic, Star Wars to the Simpsons, not to mention the new content that Disney has planned. One might expect Disney would try to cash in on all that content by setting the subscription price closer to new service’s major competitor.

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Clearly the decision was made to make the price so low that people would not regard the decision as an either/or but an and. However, how might that the subscription price be viewed by people who have just paid a small fortune to take the family to a Disney resort? In the short-term I am sure their reaction will be similar to mine, ‘That’s a heck of a deal!’, but what about longer-term? Might they start wondering why they had to pay so much to visit a Disney resort? And how about someone who buys into Disney Plus first, how will they feel the first time they decide to take the kids to Disneyland?

There is no doubt that Disney is a strong, iconic brand. I would suggest that Walt Disney Parks and Resorts is the flagship of that brand. In BrandZ we measure Disney Resorts (Disneyland and Disney World) in the U.S. alongside other leisure attractions like Six Flags and, honestly, it is no contest. Disney just stands out from the rest as hugely meaningful, different and salient. What is more, over the last few years the theme parks have gained ground on all three measures and helped Disney closed out 2018 with better profits than expected, in part due to improved attendance and prices at the resorts.

Walt Disney Parks and Resorts is seen to be hugely different from the other leisure attractions included in BrandZ, helping to justify its high price point. A large part of that advantage comes from the spectacular experience the brand creates for visitors. However, that experience does not come cheap, witness the fact that Disney is spending billions to rejuvenate and extend its theme parks, all to ensure the experience that will expand attendance while maintaining capacity-exceeding demand and steadily increasing ticket prices.

Given that the majority of Disney’s investment is destined to develop attractions based around their movie franchises, it is clear that the management sees cross-fertilisation as important, the movies and resorts are not selling to different people. So why do you think they went with $7 a month rather something a little closer to Netflix’s $13? Please share your thoughts.

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