Streaming service Disney+ will experience network effects
Earlier this week, Disney released a new streaming service called Disney+, which racked up over 10 million subscribers in the first 24 hours of its international launch. This figure of 10 million consists of people who signed up to pay for the plan regularly, people who signed up for the free 7-day trial, and people who use Verizon and received a free year of Disney+ with their Verizon Unlimited plan. Still, this figure is astonishingly large when comparing it to its competitors’ subscriber counts. Netflix (est. 2007) has roughly 158 million subscribers, Hulu (est. 2007) has roughly 29 million subscribers, and HBO’s streaming service (est. 2015) has roughly 34 million subscribers.
The release of the new Disney+ streaming service is relevant to this course because many Internet products have network effects. I think that Disney+ will experience indirect network effects, like the rich-get-richer effect. As more users join Disney+ and more content is added, the streaming service will get better for everyone using it and Disney will be able to generate more revenues to feed back into improvement of the Disney+ product. For example, since Disney+ has a large subscriber base to begin with, many content creators and media/telecom companies will want to partner with Disney+, which will add more content to Disney+, and, in turn, draw even more subscribers to Disney+. Another thing that will help Disney in its success is the fact that the company owns an abundance of content and has an abundance of means to produce new content. This is something that competitors, like Netflix, have trouble with. Netflix owns a much smaller amount of content and is seeing many of its more popular shows (e.g. The Office, Parks and Rec, Friends, Gossip Girl) migrate to other smaller streaming services owned by their content owners. Since people tend to only sign up for 1-2 streaming services, perhaps some Netflix users will migrate to Disney+ and reproduce the rich-get-richer effect yet again.