Disney Pulled a Netflix and Won't Take New Mobile Subscriptions - How Much Will They Lose?

Disney+ and Hulu have stopped letting iPhone users subscribe through their mobile apps. The internet seems to align this move with a price increase both streaming services rolled out recently and it's seen as a way for Disney to grow their revenue - after all, Apple's 30% fee isn't small when you're one of the top grossing apps in the App Store.

But... Will users continue to subscribe without the one-tap convenience the App Store offers?

The question of whether the convenience and simplicity the App Store is worth its fee has been on many minds for quite some time, but even more so recently with changes in the EU that make it possible for more publishers.

I have some thoughts about this, but first, let's look at what Disney is jeopardizing by eliminating news subscriptions, which I'll do using our App Intelligence.

Our estimates show that consumers spent $528M on Disney+ and Hulu subscriptions on the App Store in Q3 of this year. Of that, Disney got to keep $370M and Apple took a whopping $159M.

Hulu was responsible for about 17% of that, in case you were wondering.

Q3's revenue for the pair was about 15% higher than Q2's, or roughly $50 of net revenue (after Apple's fees).

So while existing users will continue to pay Disney through Apple, there won't be any new subscribers coming in through the app directly, potentially losing the streamers as much as $50M of new revenue per quarter. That's if users simply won't make the jump to the site, which isn't likely.

The magic number of new revenue Disney and Hulu need to continue the same growth is $35M, at which point they'd be earning the same without fees vs going through the App Store with fees. I know there are some fees on credit cards, but they're much smaller so I'm ignoring those for the sake of simplicity.

Seems feasible, but is it really worth it?

Is Disney Treating the Symptom and Not the Cause?

If you've been following the series, you may already know my position on the success of streaming - it's all about the content. And when it comes to Disney+, after a strong rollout a few years ago full of great exclusives and overall subscriber growth, Disney slowed down with the releases and hasn't been giving users as many reasons to subscribe.

At the same time prices have been going up and the tiers have gotten a bit more complicated, leading to even more friction.

I see Disney's choice of leaving the App Store as a long-term mistake that would cost them even more than the 30% they were giving Apple. I'll check in on Disney+ in a few months to see what the data shows - that'll be the true test.