Disney remains one of the most admired brands in the world because it delivers memorable storytelling that moves people. It knows how to touch hearts and has built an ecosystem where consumers can relive their beloved films and TV shows through merchandise, music, live experiences, theme parks, etc.—a world-class system that few entertainment companies can compete with.
But, like others, Disney is going through a tough year, and since it appears that the pandemic is not slowing down, here’s how Disney could do things differently to keep cash flowing into the company.
With many Americans spending more time at home, streaming television has become a main source of entertainment and escapism. Earlier this year, the company reported 26.5 million subscribers to its Disney+ streaming service in the United States alone. What if Disney evolved its Disney+ streaming package to include perks from its other consumer facing divisions?
Imagine a “rundle” (NYU professor Scott Galloway’s term for a recurring revenue bundle) that includes discounts on merchandise, park tickets, resorts and cruises, or exclusive access to unique experiences and other content platforms like ESPN and Hulu. A simplified package that allows fans to engage with all facets of the organization would give Disney the opportunity to grow brand loyalty with its established fanbase who are already subscribing to its streaming service.
To give more flexibility to the consumer, explore different tiered bundle packages so fans can dictate how much they want to engage with the brand. With the bundling of other services, increased package prices would be par for the course. The perks would grow more generous by the tier, e.g. higher discounts on merchandise. This keeps fans brand loyal; they will be inclined to spend more money with other Disney businesses because of the perceived discounts.
Here’s some paper napkin math to help illustrate the merit of the idea:
Disney+ is well-positioned among its competitors with its proven franchises and being a destination for a wealth of family-friendly content. With so many households needing to tighten their belts this year, consumers have to be more mindful and want to make sure they stretch every dollar, and the same time that they’re looking for entertainment within their own homes.
Will the bundle approach work? It’s not apples to apples, but look at Amazon for example. Its Prime service, which uses two-day shipping as the foundation of its annual membership rundle, includes big perks like Emmy-award winning content through Prime Video; Prime Music; Prime Gaming; Amazon Photos; Prime Reading; and early access to deals and discounts on its other services. According to Consumer Intelligence Research Partners in 2018, Amazon Prime saw more than a 90% renewal rate after the first year in the U.S. This means the rundle approach can give Disney a predictable stream of revenue year-to-year.
This is difficult to execute given how Disney is currently structured; it would mean significant changes internally to support this concept. But just like how Bob Iger took the big bet with Disney+, sacrificing short-term profits to stay competitive, this feels like a worthwhile opportunity to explore. Throughout its rich history, Disney has proven time and again it can innovate and adapt, and with this unexpected pandemic, it may have to do so again.
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