While it is one thing to talk about the digital moats of digitally native companies, changing an established organization’s orientation to how they create value is incredibly daunting. One recent example is the Walt Disney Company’s launch of Disney+. Bob Iger, Disney’s CEO, had spoken about the importance and challenge of maintaining “relevance” and being open to disrupting yourself, even when that means changing some of the foundational aspects of what made you successful to begin with. With Disney+, the company disrupted the licensing, sales, and distribution of their most core asset: their content. To enable this new model, in 2018 Disney announced a reorganization of the business, placing the management of their direct-to-consumer distribution platforms, technology, and international operations under a single leader to support not only Disney+, but ESPN+ and Hulu through more connected technology, data, and experience capabilities. The integration of these capabilities surfaced greater customer insights that enabled more personalization and improved user experiences.
When Disney+ was launched in 2019, Disney projected it would have between 60 million and 90 million subscribers by 2024. However, by May of 2020, it had 54.5 million, accelerated by demand from the COVID-19 pandemic. By comparison, Hulu was reporting 31.2 million subscribers and Netflix reported 182.9 million internationally. During the 2020 Q2 earnings call, when the COVID crisis shut down revenue from its parks and cruises, Disney reported positive overall growth, much of which was attributed to the new Disney+ business model.
What Disney did was to launch a successful digital streaming business, which now increases its relevance. But that was also only one step in creating a competitive digital capability. Disney will be taking on the challenge of evolving their new subscription-based streaming service, the consumer content demands associated with the likes of Netflix, and creating an experience that reflects their brand and meets the expectations of consumers over time. From here on, Disney+ will need to nurture and support an operating model that will continuously evolve and create value over time.