Disney Plus, Despite Subscriber Growth,
Profitability Lags Far Behind Netflix
Strengthening Indian Content and Full Launch of Korean Service
Netflix Defends with 1 Trillion Investment in Content
[Asia Economy Reporter Cha Min-young] Disney is putting the brakes on Netflix's dominance, which has been generating massive profits through first-mover advantage in Asian markets including South Korea. In particular, the launch of Disney's online video service (OTT) Disney+ in South Korea this year has made a direct confrontation with Netflix inevitable.
Disney+ Losing Revenue to Netflix
According to The Hollywood Reporter on the 28th, research consulting firm Media Partners Asia (MPA) recently reported that Disney+ will aggressively expand its market share in the Asia-Pacific region, where Netflix has been dominant, in 2021.
The report stated, "Disney+ is estimated to have 66 million subscribers by the end of the year, more than double the 32 million paid subscribers in Asia at the end of last year," and "Netflix is expected to increase from 25.5 million to 33.3 million subscribers during the same period."
However, Netflix is expected to generate overwhelmingly higher revenue in the Asian market. The report predicted, "Netflix's revenue is expected to increase from $2.4 billion (2.7 trillion KRW) to $3.3 billion (3.7 trillion KRW), whereas Disney's revenue will only increase from $500 million (563 billion KRW) to $1.2 billion (1.35 trillion KRW)."
This difference is due to the companies' pricing policies and the countries targeted by their services. Disney+ is expected to have 76% of its Asian subscribers from India, where subscription fees are set low as of the end of this year, while Netflix is expected to maintain 39% of its Asian subscribers from advanced countries such as Japan and South Korea. Disney+ has yet to launch services in key countries like South Korea, Taiwan, and Hong Kong.
Outlook for Fierce Competition in South Korea... Leadership Restructuring and Content Investment
Intense competition is expected in the South Korean market this year. Disney+, which is pushing for entry into South Korea this year, has also made changes to its leadership structure in Korea. On the 26th, Walt Disney Company Asia Pacific (APAC) appointed Oh Sang-ho, former executive director of Disney Studios Business Division, as the new CEO of Walt Disney Company Korea. CEO Oh will oversee Disney's strategy and overall business in South Korea. Kim So-yeon, former director of the Consumer Products Division, was appointed head of the DTC (Direct-to-Consumer) division. Kim will optimize the operation of domestic DTC business including Disney+ and lead consumer strategy.
Netflix is taking a defensive stance by strengthening locally tailored original content. MPA stated that Netflix is expected to spend over $1 billion (1.126 trillion KRW) in Asia this year. More than half of this, 550 billion KRW, will be used for producing Korean original content. Considering that Netflix invested about 770 billion KRW over five years from 2016 to 2020, with an average annual investment of around 150 billion KRW, this is more than three times the previous scale. The number of Korean original content produced over five years reached about 80 titles.
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