Customer connection will make or break VOD’s newest entrants

With Disney+ now in full stride in the Australian market, is anyone paying attention to Apple TV+? Customer connection means more than Disney gives it credit, says Iman Ghodosi, and Apple has it in spades.

Iman Ghodosi 150 BWIn November, two of the biggest names in the world of media and technology launched their video on demand (VOD) services.

Disney, of course, launched its subscription streaming platform, Disney+, on 19 November in Australia and New Zealand, having gone live in the US, Canada and the Netherlands a week earlier.

Apple launched Apple TV+ worldwide on 1 November.

Disney+ has been met with great interest, experts and online pundits have pored over its treasure chest of content and cheap monthly pricing. Some have also noted the technical difficulties that plagued its launch in the Northern hemisphere. Apple TV+, on the other hand, has arrived in Australia and made barely a ripple in the media pond.

The CEO of Zuora, Tien Tzuo, wrote about this epic new sub-plot in what’s become known as ‘the streaming wars’ as if it were a title fight: “In one corner, we’ve got Disney, widely viewed as the 800-pound content gorilla. [It is] launching with hundreds of movies and TV shows from six major brands: Disney, Pixar, Marvel, Star Wars, National Geographic and The Simpsons. [Disney is] sitting on almost one hundred years of proprietary content, going back to 1928’s Steamboat Willie…”

“In the other corner, we have Apple, which is weighing in at… eight shows. Eight measly shows. What’s worse, half of these shows have already been dissed relentlessly by the critics.”

Tien says that if you left your analysis there, you might come to the conclusion that Disney should leave Apple in its wake. A deeper examination, however, leads him to an entirely different conclusion.

“While content is important,” Tien argues, “the real measure in the game is the number of subscriber relationships. And in this dimension, Apple is at least a decade ahead of Disney. Disney CEO Bob Iger basically admitted as much a few years ago, when he said: ‘It’s one thing to be as fortunate as we are to have Disney, ABC, ESPN, Pixar, Marvel, Star Wars and Lucasfilm. But in today’s world, it’s almost not enough to have all that stuff unless you have access to your consumer who, because of technology, is providing you with incredible data to provide the consumer with a more customised and personalised experience that can be monetised better.'”

Apple has approximately one billion registered users and they interact with the company and its products many times a day.

“The average iPhone user unlocks their phone eighty times a day,” Tien continues. “And that’s not counting Apple TV, your Mac, Photos, Apple Music and more. [Apple’s] revenue from services and subscriptions ($12.5 billion last quarter) is now bigger than its computer business!

“How many registered users does Disney have?”

You might ask, ‘well what about people who buy Disney merchandise and see Disney movies?’

But a dad who buys a Captain Marvel costume for his daughter is a Target customer, not a Disney customer. A family who goes to see Frozen 2 on Boxing Day is a Village or Hoyts patron; they don’t deal with Disney.

Tien is spot on: relationships with subscribers are critical – in quantity but also in quality. Not only does Apple have one hundred million users, but many many millions of people who swear by their products and services. Disney understands it needs to build these relationships if Disney+ is to succeed.

To return to the boxing analogy briefly: who, out of these two great American heavyweights, will win?

Actually, I think they both can.

We call them ‘the streaming wars’, and competition between rival media companies is undoubtedly fierce, but they’re interesting and worthy of note because everything is moving to VOD. That’s not just happening on an industry whim.

People are sick of ads. They’re sick of buying what they want as part of a package with dozens of channels they have no interest in. They’re sick of inconvenience. They want to access the shows they want anytime and anywhere – in your lounge room, on your TV, on a train to work on your smartphone or at the beach on your tablet.

And media companies, who realise the value of closer relationships with customers, are more and more willing to give them this choice. They see the situation as a win-win.

What I’m saying is that perhaps Disney and Apple can both win. If you think we’re getting to a situation where there are too many players competing in a dwindling market, perhaps think again.

In fact, the most recent global survey of the subscription economy by Zuora found that more than two thirds of Australians have subscription services today, up from 49% just five years ago.

Australian respondents averaged 2.5 subscription services and nearly one third said they expected to have more subscriptions in two years. By 2025, my guess is that average number is more likely to be 10.

It will be fascinating to watch over the next year or so if, as Tien predicts, the conventional wisdom about Disney+ being a runaway success in comparison to Apple TV+ proves wrong.

Moana, Mickey and Marvel offer a pretty compelling sales pitch for parents and superhero fans, and I can see subscribers joining in numbers early (although Disney would want to make absolutely certain that the numerous technical errors that paralysed the service at the US, Canada and Netherlands launch don’t affect subscribers in Australia and New Zealand). Whether Disney sticks around will certainly come down to what Tien is talking about – customer connection. But if it can, there’s more than enough room in this corner of the subscription economy to accommodate everyone.

Iman Ghodosi is APAC VP and GM at Zuora

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