Hello,

This is my weekly private letter on marketing and distribution models. When relevant, I'll also share numbers and discussions on Buffer projects to give you an insider look at the daily life at a tech company. In this private letter, I'll be talking about the project to update our homepage.

Disney's Distribution

First, a recent news: Disney reported 50 million paid Disney+ subscribers worldwide after just five months since the launch:

Within five months of initial launch, Disney Plus has signed up 50 million paid subscribers worldwide, the media company said.

Disney last reported 28.6 million Disney Plus paid subscribers as of Feb. 3, meaning it’s packed on more than 21 million net new subs in roughly two months...

The 50 million figure is well ahead of the company’s own forecasts — and those of Wall Street. Disney, in unveiling the road map for the streaming service almost exactly a year ago for investors, had pegged a goal of 60 million-90 million global subs by the end of fiscal 2024 (Disney’s fiscal year ends in September). Disney Plus may hit that target four years early.

And this is even before Disney+ is available in Western Europe, Latin America, and Japan.

There are two interesting distribution strategies I want to highlight here:

First, partnership is a powerful lever to pull for distribution. Part of Disney+'s growth can be attributed to Disney's partnership with Verizon. As the exclusive US wireless carrier partner for Disney+, Verizon has been offering 12 months of Disney+ to all new and existing 4G LTE and 5G unlimited wireless customers — for free. According to then-CEO Bob Iger, about 20 percent of Disney+ users came from Verizon (which is much smaller than I had expected). Partnering with the second biggest telco in the US by market share gave Disney access to millions of potential customers right away. In practice, that likely meant emailing millions of Verizon customers about Disney+ during the launch and sending followup emails and letters over the next few months. Partnering with a non-competing company for distribution feels like a strategy that more tech companies should adopt but I have not seen many myself. Content partnership seems more common likely because it's easier to coordinate. If you know of any similar partnerships from tech companies, let me know.

Second, Disney+ in itself is a distribution channel — for Disney's other businesses. Disney is likely making a loss through the partnership, at least for now [1]. But that seems fine if you look at Disney+ as part marketing expense, part new business line, just like other parts of the business.

The Disney business map by Walt Disney

Disney+ is a new distribution channel that Disney fully controls. As I tweeted, "Disney+ feels like a marketing tool for Disney’s parks, resorts, and merchandise. Parents pay for Disney+ for their children, who will then ask to buy toys and visit Disneyland." The unique thing is this marketing expense might eventually become a negative cost (i.e. profitable).

What other distribution strategies and takeaways can you draw from Disney+? I'm keen to learn from you.


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[1]: Disney+ costs $7 per month while Verizon is paying Disney about $4. This means Disney is paying about $36 ($3 per subscriber multiplied by 12 months) to acquire each customer. A portion of the customers will not continue subscribing to Disney+ after the free 12 months so the cost of acquisition will be higher. Assuming 20 percent of the customers churn, the cost of acquisition will be about $45. To cover this cost (excluding other marketing expenses), each customer has to subscribe for at least another seven months.