Why Disney Stopped Subscriptions on the App Store
Ariel Michaeli (October 2024):
I see Disney’s choice of leaving the App Store as a long-term mistake that would cost them even more than the 30% they were giving Apple.
Now that we have enough MRR data I think the reason is a bit clearer - and it isn’t just about fees.
[…]
In November, the first full month of no subscriptions, Disney+’s net revenue dropped by about $16M and Hulu’s by 28% - that’s double-digit millions in both cases - which means paying users are abandoning Disney at an alarming rate.
I think the reason Disney pulled out of subscriptions in the App Store is because they couldn’t figure out how to fight the churn which in turn necessitated getting fresh subscribers which isn’t easy.
Maybe I’m missing something, but this doesn’t make sense to me. First, the revenue reported is from both the App Store and Google Play; it would be helpful to see the Apple portion broken out. Second, why would leaving the App Store help with churn? I could maybe see that there’s more churn with App Store customers because Apple makes it easier to cancel. If you can get the same person to subscribe on the Web they might be more sticky. But, on the other hand, maybe it’s easier to sign them up with IAP. Easy come, easy go.
Without knowing the overall revenue picture, including direct-to-Disney revenue, I think it’s hard to conclude much. Of course, the App Store numbers are going down because every month there will be some cancellations with no new sign-ups. But we don’t know how many new and return subscribers there are or whether that would have been higher or lower with the App Store. Presumably, in the past there was a good stream of new App Store subscribers since the total was up over the year.
To me, the only thing this shows for sure is that the churn is very high, which suggests that lots of App Store subscribers were not staying long enough for Disney to go down from paying 30% to 15% in fees to Apple.
Previously:
Update (2024-12-20): Joe Rosensteel:
I have no data for this, but I continue to believe this is mostly about bundling in two ways: Bundles combat churn because people don’t want to start/stop parts of a bundle. Bundlers can also charge more for a bundle, which means higher fees. I think part of this will be explained when we see how much the “flagship” ESPN product will eventually cost.
The non-bundle DTC angle is that Disney can directly appeal to customers to rejoin for “relevant” shows. Can’t do that through Apple.
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Maybe the point is that they have not enough visibility and KPIs on the churn on the App Store, nor any way to mitigate it. Outside of the App Store, they know the user better : name, email, etc. and can develop strategies to keep them on longer with actionable KPIs.
Not saying it's the right decision, but that would be my guess.
A couple of points:
- With the simplicity of cancellation and resubscribing on the App Store, Disney may have found a lot of App Store originated customers cancelling and resubscribing regularly depending upon content releases etc. If this is the case, it would inflate their churn (when looking across a single month) and also would mean they constantly pay Apple 30% for these customers; instead of 15% if the customer had been retained for 1+ year. The financial impact of such behaviour would be very large for Disney.
- As you note, without knowing overall revenue (including DTC revenue), this could be seen as a positive that Disney is successfully migrating App Store originated customers across to DTC customers and saving themselves 15-30% in the process. If customers are cancelling and re-engaging regularly, then the re-engaged customers in November would be becoming direct customers but not show in the App Store figures.
- Bundles are the future; both to lower churn and increase per customer revenue. Already being done with Disney+ and Hulu and ESPN+ and Max. In the future with the full ESPN. The 30% App Store tax is a lot harder pill to swallow when each customer pays you $30 per/month vs $10 per/month.
> Bundlers can also charge more for a bundle
I thought this was a typo until i realised you cant buy the unbundled items individually.
And we’ve come full circle. Streaming companies have reinvented cable, only this time it’s even more expensive and they keep even more of the revenue.
Also now there are ads. I predict 2025 is the year we see the first major streaming service completely remove an ad free option. We are already almost there, the “ad-free” versions are already getting pre-roll promos.
At this point the best (legal) option seems to be to just buy the few shows worth watching. Maybe it’s just me and everyone I know, but we tend to just re-watch the same old good shows because there is little new that is good.
Of you live in the US ditch all subs and borrow from your library. https://www.kanopy.com/en
Yes, you'll miss out on new releases but there are so many great movies to watch.
@Bart, I respectfully disagree.
I "cut the cable" with Spectrum in November - both internet and TV. Save about $8 per month on internet and get double the speed (went with the local fiber provider). Save over $150 on TV with their basic service= that provides me local channels and much of what I watch elsewhere, except sports (of course). And there's the rub....
It takes effort, but monthly subscriptions to three sports providers cost me an extra $42 a month. Being a Buffalo fan I'm likely adding $7 for Netflix before Christmas because KC-PITT is important. (And I'll cancel it before it automatically renews in January.) So we're talking a "true" saving of $100 in December with a potent saving of $150 in January and later. As I said, it takes effort.
Yes, there are ads. Ever watch an NFL game OTA? By my math, today's Bills game starts at 4:25 local time and won't be done until 7:30. Let's call it 7:25 for rounding. 3 hours of programming for 60 minutes of play. Hard to mind ads in light of that. My ,locals stations - all 5 of them (CW, NBC, CBS, ABC, PBS) are actually 11 once you add the extra digital only stations... and they actually include the "same good old shows" I like and think you speak of. Better yet, my local "basic" option, which is $45 a month, has shared DVR (with ads) capabilities.
I'm still adjusting to things. I think it was around 20-30 years ago that the term "ala carte" was being used for what became "cutting the cable" around 10 years ago, which was 5 years after Steve Jobs mentioned "finally figuring it out". For all this Apple got $250 for my two Apple TV boxes and if I like what they offer for a show, $10 for a month of binge watching it. I really don't think this was *exactly* what he meant, but this is what it is. As for Disney+, they give me no reason to subscribe. None. Star Wars? Nope. When season 2 of Shrinking finishes next week maybe I'll watch it over 1-2 months, caccel my subscription, and do it again when season 3 is over.
Churn. As I said, it takes effort, but nothing more. Now, if only MLB can let me know how I can stream the Guardians next season.....
> Streaming companies have reinvented cable
Along with everything you said, they also reinvented creating a bunch of cheap low quality content to pad out their offerings. It's cable, with the admittedly key advantage that you get to watch whichever slop you want on your own schedule.
It's really too bad that the promise of streaming has degraded into this garbage. Enshittification and all that.
Back in the 2000s, I had a modded Xbox running XBMC and a network drive full of TV shows and movies. It wasn't perfect, but it gave me a convenient 10-foot interface for browsing my media and playing whatever I wanted, when I wanted, with no commercials or other distractions. I knew this was the future, the *good* version of watching TV, and told myself that when a decent paid service came along that offered the same thing, I'd go for it and save myself the hassle of maintaining it myself.
Nowadays, I'm still basically doing the same thing, just with a modded Xbox replaced by a modern HTPC, because it's still the only way I can tolerate it. I look at all of the streaming offerings, and there are so many deal breakers:
- Terrible fragmentation
- No control over content -- it can vanish at the whims of the content holders
- Ads everywhere, even when you pay not to have them
- Dark patterns everywhere, constantly trying to control you and shepherd you into staying engaged
- Privacy invading spyware
- Shitty UI that makes it hard to find what you want
- No consistency between the various apps
Now that I write that all out, these are the same problems with every computing device everywhere. Woe unto us all!
I think Disney are skating to where the puck will be. Sooner rather than later all streaming services will ditch the app store because it makes no sense to pay Apple 30% when no one else is.
For each new exit, customers will become more familiar with doing business directly with the provider.
And yes, this will absolutely lead to a shittier experience for customers.
@Dave Are you in the Guardians' broadcast area? If not, MLB package can be bought that allows you to watch the Guardians, but it only works if you are not in the viewing area, otherwise the games are blacked out. T-Mobile has given the MLB streaming package away as a perk for years and may continue to do so next year. Might be worth checking out if you are a T-Mobile customer.
@Kristoffer I don't blame companies for not using the App store for signups. It's funny, I tend to always go straight through the company unless there is a deal to use a third party provider and the experience is generally fine honestly, never really had a complaint.
MLB will be providing in-market and out-of-market streaming for the Guardians in 2025 after the prior RSN deal expired. There will be no blackouts except for nationally televised games (and presumably the playoffs). And, yes, T-Mobile will be making their annual offer to its users of a free MLB.tv subscription. They renewed their marketing agreement with MLB earlier this year (for 5 years, I think) and said then that they would continue the promotion through this new deal. Historically, they've provided subscribers a week to sign up through the T-Mobile app, that week being the first week of the MLB season.
@Nathan_RETRO, @NaOH.... yes, I'm in the RSN area (Erie PA, about 100 miles away. Over the years I had Adelphia, which was bought out by Time-Warner, which was bought out by Spectrum, which if you check is really Comcast. The Indians, now Guardians, have been on Bally Sports Great Lakes, not to be confused with Bally Sports Ohio, which carry the Cavaliers and the Blue Jackets (but are blacked out here for some reason). Nowadays Bally Sports, which declared bankruptcy earlier this year and dropped the Guardians (including the post season pre/post game coverage) is called FanDual (of course, like all sports anymore, the Cavaliers are on a network run by a betting outfit).
Whew. Still with me? Last I heard (through cleveland.com and it's subscriber paywall) @NaOH is correct... MLB has promised to pick things up. But with no specifics announced yet, what the price? I'm not a Columbus NHL fan but a Buffalo one. Back in the day, I could get the Sabres on Adelphia. But then I couldn't, as the NHL declared Erie to be *both* in the Buffalo *and* Pittsburgh markets, and Time-Warner (now Spectrum) carried only Pittsburgh, not Buffalo, as TWC really was Northeast Ohio (I came to understand any calls had me identifying myself as having a channel lineup different than NE Ohio).
Still with me? Because now we get to RSNs. Seems that because Buffalo (same distance ad Cleveland) can watch nationally televised Sabres games through MSG+ (or MSGB) but they are backed out completely ib Erie because TWC (now Spectrum) doesn't carry that channel. Which leaves me with two options. (1) Subscribe to MSG Sports - called Gotham - at around $100 per month or (2) subscribe to Fubo for the same amount and get the RSN feed - but not anything related to Turner Sports network. Fortunately(?) the Sabres are 0-10-3 coming into tonights game against the NY Rangers, which I assume will be on both MSG channels at the same time Utah is in Cleveland against the MBA best team (that somehow didn't make the knockout round of the NBA Cup) that will be carried on FanDual.
Until I hear the actual details from MLB TV (including subscription price) I'm on hold with how I plan to watch the Guardians. @Bri correctly spoke of fragmentation. While there may be differences between classic programming and sports, it adds up to the same thing - a changing landscape where millionaires (athletes and actors) work for billionaires (owners and media companies) and us lower forms of life (at least income-wise) support the entire thing.
