It’s been two years since Apple TV Plus and Disney Plus debuted noisily, launching the Streaming Wars as we know them. Except there’s still so little clear about where either of them is headed that it becomes difficult to be definitive about what’s next for each.
Apple’s debut featured a handful of shows, led by the pricey and high-profile The Morning Show. But there wasn’t much else in the company’s originals-only approach that eschewed the acquisition or licensing of older shows. To fluff up viewership, Apple handed out millions of free year-long subscriptions to buyers of its iPhones and other hardware (a giveaway that lasted until June of 2021 for some devices).
Going originals-only wasn’t a terrible idea, but the pandemic sure made it look that way. Production of new shows halted while hundreds of millions of bored viewers turned to streaming TV to fill their days.
Apple TV Plus became a quickly exhausted, often overlooked option for viewers seeking streaming succor. Consider it a badly missed opportunity to lock in an important new aspect of Apple’s famously strong customer loyalty.
Contrast that with Disney Plus, which launched 10 days after Apple TV Plus and quickly racked up 116 million subscribers and exultant analyst predictions that it would soon surpass Netflix. The service initially drew rapt fans of Disney or beloved brands such as Marvel and Star Wars, but the pandemic drove many other households filled with stir-crazy kids to Disney’s door.
If any streaming company took full advantage of the pandemic’s potential, it was Disney Plus. Launch series The Mandalorian sent Star Wars fans into orbit, Wandavision proved a unique and compelling take on Marvel superheroes, and direct-to-streaming releases of a handful of Pixar animated originals cemented the service’s appeal to families.
But that was then. Where are we now? It’s a considerably more muddled picture for the two streamers two years in.
Apple’s originals production seems to be hitting a compelling cadence, with half a dozen series and features arriving the past two months. And debuting this week are Dr. Brain, a sci-fi horror series from Korean filmmaker Kim Jee-woon, and Finch, a sci-fi feature starring Tom Hanks.
It’s not Netflix, which seems to release something new practically every day. But Apple TV Plus is finally a Plus, instead of a Promise. It now offers a substantive array of features, series, documentaries (especially on music), specials, talk shows and more, all led by Ted Lasso, whose first season racked up seven Emmys, including Best Comedy Series.
And there’s growing evidence that audiences are watching. Both Parrot Analytics and Whip Media, which each track audience interest in streaming services in different ways, point to significant uptake for at least some shows.
Last week’s Whip Watch Report on streaming original series, for instance, put The Morning Show, Ted Lasso, and Foundation at Nos. 4, 5 and 9 in their Top 10 most watched series. Netflix had the top three, and no other streamer had more than two.
The Information reported this summer that Apple TV Plus had around 40 million subscribers. Unknown is how many are paying customers, but that can be said of many competitors whose services are included as mobile carrier premiums, are bundled with other services, or otherwise folded into company-wide streaming totals.
Disney Plus, after that 116 million subs rocket ship ride, now faces a few asteroids in its stellar traverse. Disney CEO Bob Chapek warned in September that Q3 Disney Plus subscriber adds would only be in the “low single-digit millions,” sending Wall Street into a tizzy. Four analysts downgraded their estimates of how much the service will grow, and cut the broader company’s share price targets and ratings in some cases.
Barclays analyst Kannan Venkateshwar wrote that Disney’s “long-term streaming guidance could be at risk,” as he cut his own estimates, reduced the price target $35 to $175, and dropped his rating to “equal weight.” Others were more gentle, but Wall Street is in more of a wait-and-see about the service heading into next week’s earnings call.
And it’s fair to ask if Disney Plus faces a natural ceiling on its subscriber base. It’s focused so intently on a handful of family-friendly brands in Pixar, Star Wars, Marvel, and National Geographic, a strength with many potential subscribers but less so with others. Not everybody’s into princesses and spandex.
More problematic may be the continued slow rollout of compelling new shows. Many are deeply self-referential: meta-documentaries about the Disney universe, behind-the-scenes shows, animated shorts featuring the same well-known characters. That feeds the faithful, but won’t grow the service a whit.
“You have a lot of streaming services who were like, ‘We could not have possibly forecasted how incredibly successful we would be,’ ” Jeff Coon, managing director of investment bank Progress Partners, told Next TV. “Because, frankly, we never could have forecasted the unprecedented free time that consumers would have, and how that would translate into what is probably a once-in-a-lifetime increase in media consumption and gaming.”
So, now comes the hard part—plussing up the content and moving into related areas such as gaming that are deeply engaging especially for the younger audiences of the future, Coon said. Expect Apple and Disney to be in the middle of that as they and other media and tech giants build and expand “content fortresses” around their IP. Further, expect new contenders to create their own streaming and gaming operations.
“I think you're going to see significant investment in original content creation capabilities by a huge and growing number of technology companies,” Coon said. “So what began with Netflix, you're beginning to see a significant increase in the investment in original content from Apple. You're beginning to see original content experimentation by Snapchat with Snap Originals. I think it is not too large a stretch to envision a reality in which TikTok looks at both broader distribution of its content into different channels, as well as experimentation with original content. I think you're gonna see a lot of these technology companies begin to experiment with packaging and distribution of their content in different ways.”
Apple’s ramped-up video production and launch of its Apple Arcade game service are smart responses to this reality. Disney, however, faces a more complicated set of questions.
It still must feed its legacy broadcast and cable operations. It has spread its streaming content ventures across Disney Plus, Hulu, ESPN Plus and now, Star.
Finally, Disney’s huge investment in sports rights for ESPN and ESPN Plus represents a significant chunk of its entire programming spend. Those live games and related programming remain hugely valuable in the moment to audiences and advertisers, but unlike a new movie or scripted series, they’re nearly worthless days later.
And though Disney has profitably licensed its Marvel, Star Wars and other IP to numerous video game companies, it doesn’t currently have a significant internal game division, unlike Apple, Amazon, and Netflix.
“Owned-and-operated original content (that) can lead you to that proprietary content fortress certainly seems to be an overall trend cross-channel right now,” Coon said. “You’re seeing that translate into huge M&A activity around accumulating phenomenal original-content production capabilities, whether that's television or film studios, or gaming studios. You're seeing media companies expand into gaming, you're seeing gaming companies expand into media, to get that cross-channel ability to leverage that original content fortress.”
So, two years in, while just about everyone in streaming would love to be Disney Plus’ position, with all those subscribers, it’s just possible that its prospects are less attractive than we thought. And it’s also possible that Apple TV Plus has only just begun to matter. Two years from now, the winners list in streaming may look very different.
