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According to a new report released by the Motion Picture Association, worldwide subscriptions to online streaming services just recently surpassed 1 billion in 2020. This marks an unprecedented moment in the global home and mobile entertainment market. With people spending more time than ever at home because of COVID-19, the up-trend represents a growth of 26% compared to 2019. Movie theater ticket sales dropped by 80% in 2020, while 55% of U.S. adults reported that their viewing of movies and shows through an online streaming service increased.
The Rise Of Netflix
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Netflix’s VP for original content Cindy Holland revealed during a conference in 2019 that the average Netflix user watches around 2 hours of content per day. However, it was estimated that during COVID-19, Netflix viewing time in the U.S. increased by 61%, which translates into an average of 3.2 hours of viewing per day. In April of 2020, Netflix CEO Reed Hastings said “The thing we are certain of is the internet is growing. It’s a bigger part of people’s lives, thankfully. And people want entertainment. They want to be able to escape and connect, whether times are difficult or joyous.”
The company reached over 200 million subscribers even as they increased prices in the U.S. and Canada during the last quarter of 2020. Netflix also plans to release 70 new titles in 2021, continuously offering users a plethora of fresh content to consume. As one of the biggest streaming platforms, Netflix faces competition from the likes of newer streaming services such as Disney Plus and HBO Max.
Disney – Shifting Gears During Times of Change
As a company primarily based in theme parks and cruises, Disney’s business environment was not off to the best start in 2020. The pandemic prevented people from being able to travel, and theme parks were shut down completely during most of last year. This lead to a decrease in travel and tourism, while the revenue generated by Disney’s parks and resorts dropped by 10 billion USD in 2020.
Luckily, Disney doesn’t keep all of its eggs in one basket. The company’s media networks sector generated over 28 billion in revenue last year. Their streaming platform Disney+ was created in November of 2019, just before the pandemic reshaped the way we enjoy entertainment. The timing of this release was perfect for them to catch the wave of the upcoming trend. In just 16 short months, Disney+ amassed a shocking 100 million subscribers. The company has set a target to release at least 100 new titles on the platform each year. “This has been the most challenging year we have had in recent history, if ever,” says Disney Chairman Robert Iger. The company will continue to expand with its streaming services and growing its diverse portfolio of assets.
This is Just The Beginning For Netflix and Disney+
While the number of streaming service subscriptions has reached its highest in history, popular streaming platforms still face ongoing challenges. One of the biggest challenges these companies face is how to generate more revenue from their existing customers. The easiest option for revenue to increase would be to raise the prices on their subscription offerings, but this could negatively affect long-term customer retention. They can also potentially add additional subscription options or upgrades, allowing access to more content. For this to happen, either company would likely have to reach an agreement with other media providers that may begin to offer content as an additional option through the platforms.
The Growth of Screen Time
The growth that online streaming has experienced is in parallel with other areas of consideration, such as overall screen time worldwide. As more and more are working from home and abiding by social distancing protocols, we are also left seeking more entertainment from our devices. The trend of working from home has been so strong that companies are moving some positions to a permanent remote working structure. The popular video conferencing app Zoom experienced a customer growth of about 470% in 2020 alone. This goes to show how Netflix and Disney have had such a meteoric rise since we are on our devices longer and more frequently than ever.
