Disney (DIS) Steps Up Investments in Content

Value/price equation evolves through streaming, parks, and shift to AVOD

The Walt Disney Company's (DIS) unparalleled intellectual property (IP) in its streaming service and park experience may be about to get better, thanks in part to the pandemic. Several of Disney's revenue segments—the parks, theatres, and cruise ships—were affected by the pandemic. Now the entertainment giant is investing in content both as a way of building a service that could benefit from pandemic-like situations and as a way of capitalizing on the larger trend away from linear TV to direct-to-consumer content.

Key Takeaways

  • Disney's investment in its streamed content will change the value/price equation as it seeks to achieve a steady state in 2023.
  • Revisions in pricing strategies for its parks aim to achieve higher revenues per guest and a less crowded park.
  • Advertisement-supported video on demand (AVOD), along with premium content, could help the company reach its target of 230 million to 260 million subscriptions by 2024.


In the first quarter earnings call, Disney CEO Bob Chapek mentioned the billions of dollars of investment in content for the company's streaming service Disney+. Although the pandemic has hurt production targets, Chapek maintained that Disney's content streaming business is well on track to reach a steady state in 2023. By offering even better value by building premium content in large volumes, Disney may be in a position to reprice Disney+, which is now available at $8 for monthly subscriptions and $80 for annual subscriptions in the U.S.


The pandemic also induced a change in Disney's park experience. As parks opened, the need to avoid crowds resulted in some changes that may be here to stay. At the recent Morgan Stanley 2022 Technology, Media, and Telecom Conference, Disney's Chief Financial Officer Christine McCarthy hinted at a different approach to park reservations that will seek to enhance guest experience through less crowding. While that would mean less revenue, Disney's new price package and Genie+ will offset some of that loss. The company will also continue to rely on revenues from the annual passholder segment.

Genie+: The Cost of a Less Crowded Park

The company has been making a series of changes that increased the price of multi-day tickets and park hoppers, removing the popular FastPass+ that allowed visitors to book up to three attractions in advance for free. In its place, Genie+ and Lightning Lane are now available at an additional cost of $15 per day. Genie+ does not cover some of the very popular rides that are covered by a different pay-per-ride ticket for individual attractions.

In Florida, guests cannot pre-book the Genie+ service when they buy a single-day ticket to the park. The aim is clearly to discourage single-day visitors from visiting on weekends or other days when the parks are likely to be crowded and the Genie+ is likely to be sold out. Disney has always made its pricing attractive to multi-day visitors. The latest move for its Florida parks is the company's way of distributing its crowds between busy and not-so-busy days.

It remains to be seen how exactly Disney chooses to leverage the pricing power that will follow its premium content. While matching price to higher content value would indicate a price uptrend, that number may be tweaked downward as Disney's advertisement-supported video on demand (AVOD) gains traction. The increased investment in content, a different price tag for the service, and the move to AVOD are Disney's efforts to achieve its target subscription of 230 million to 260 million by 2024.

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