Walt Disney on Wednesday reported better-than-expected subscriber growth from its marquee streaming service Disney+ as it charged
Question:
Walt Disney on Wednesday reported better-than-expected subscriber growth from its marquee streaming service Disney+ as it charged forward with its direct-to-consumer transformation while increasing revenue from its crucial theme parks business.The Burbank entertainment giant said Disney+ added nearly 8 million subscribers during the second quarter, exceeding analyst estimates. Disney's latest report was sure to attract attention amid growing worries among investors and Hollywood executives that the streaming business may not be as big or lucrative as once thought.
Entertainment companies, including Disney, have spent billions of dollars to launch and expand streaming services that would compete with Netflix as the Los Gatos, Calif., giant upended the business. Early in the pandemic, subscriber counts soared and share prices followed as housebound consumers signed up for at-home entertainment options. But then Netflix last month reported that it had lost subscribers for the first time in more than a decade. The company's membership count declined by 200,000, prompting executives to blame competition, rampant password sharing and the company's pause in Russia. Netflix promised to rein in spending. Jobs were cut in marketing. Netflix's shares are down more than 70% so far this year.
Disney's shares have also taken a hit amid broad stock market declines, despite the remarkable resurgence of the company's parks and theatrical releases such as its latest Marvel hit, "Doctor Strange in the Multiverse of Madness." The company has promised Wall Street that Disney+ will reach 230 million to 260 million subscribers by 2024, which is when it also expects the service to become profitable. Some analysts have questioned whether that goal is realistic.
a) What possible strategies should Netflix and Disney follow in the near future? Justify your choice of strategy briefly. Highlight any market characteristics like saturation, consumer price sensitivity that have informed your strategy choices.
b) Copy and paste the 'Game Matrix' in the answer section.
Firm 2: Netflix | |||
Strategy 1 | Strategy 2 | ||
Firm 1: Disney | Strategy 1 | ||
Strategy 2 |
Edit the matrix and fill in the strategies.Use numbers of your choice for payoffs.
What is your proposed Nash equilibrium for the game?
c) Do you think Netflix still retains any first mover's advantage?
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill