Disney+ Hops On Latest Streaming Trend: New Value-Added Features

The disappointing numbers reported by Walt Disney in Tuesday’s earnings call prompted distress on Wall Street, where the company’s stock plunged, and grumbling among investors worried about widening losses in the streaming division, despite big gains in subscribers.

Chief Executive Bob Chapek outlined big-picture plans to offset the losses, including increases in streaming pricing, a standard industry trick.

But Disney+ is also trying something entirely new in an attempt to find fresh sources of revenue. Last week, it launched a test run of an e-commerce feature that lets subscribers shop for Disney-branded merchandise by navigating through the pages of popular movies and shows on the app.

The streamer joins a growing number of competitors looking to leverage their platforms for new avenues to make money. YouTube and Netflix have also expanded their revenue opportunities in recent days as competition in the sector heats up. YouTube added a new portal called Primetime Channels that brings new TV and movies to the streamer. Meanwhile, Netflix began accepting advertising for the first time in its history, hoping to ramp up revenue and offset subscriber declines earlier this year.

These streamers are hardly alone in their struggles. A familiar industry pattern of dropping subscriptions has emerged in recent months, following pandemic-induced lockdowns in 2020 and 2021 that led to a spike in streaming viewership—timed perfectly to coincide with the then-recent launches of streamers like Disney+, Apple TV+ and Peacock.

The streamers fattened subscriber rolls based on the huge appetite for indoor entertainment amid the lockdown. But subscriber numbers for many have fallen since, with consumers also sampling different services and then settling on a couple they liked.

While Disney+ has been an outlier continuing to grow, it has the advantage of being offered in a package with Hulu and ESPN+. Still, streaming is an expensive industry, and on the earnings call, Disney said that its direct-to-consumer streaming division suffered losses of almost $1.5 billion, which is more than twice last year’s level. The company has nonetheless set an ambitious goal to break even on streaming within the next two years, hence the incentive to try out other avenues—like adding e-commerce options to the platform.

E-Commerce: A Natural Extension For Disney+

While YouTube is adding value through content and Netflix through a souped-up advertising marketplace, Disney arguably has the best resources to pull from to find a new stream of money. Nothing rivals Disney in terms of brand ownership, from its princesses to Star Wars to the MCU.

So it only seems appropriate that Disney+ would take advantage of those ties and integrate them into its app. People can scan QR codes that appear on screen or click on the “shop” tab alongside certain streaming options to browse merchandise related to the movie or show.

For instance, the 2022 Disney Pixar movie Lightyear includes a link to the shop featuring branded Buzz T-shirts and sweatshirts. It’s a no-lose extension of the brand and certainly makes it easy to buy holiday gifts for kids, say, after watching a family movie together. (Don’t worry—the links only appear on pages of verified adults; your 4-year-old can’t spend her college fund on Ariel wigs without your OK.)

Integration of e-commerce and TV viewing or streaming has been done before, though not with any great success. Disney might be the brand that can actually break through, but the company isn’t relying on shopping alone to negate that billion-dollar operating loss. Like Netflix, Disney+ is also launching an ad-supported tier this year.

Will other streamers copy the e-commerce strategy, too? Yes, if it works. In the meantime, the streamers will continue to keep an eye on what other revenue-generating new features competitors are rolling out—and if they can benefit from a similar strategy.