There has been a growing rash of incidents involving companies suddenly abandoning products shortly after releasing them, or locking features behind subscription paywalls after consumers purchase the product. Representatives for Consumer Reports, U.S. PIRG, iFixit, the Electronic Frontier Foundation, the Software Freedom Conservancy, Californians Against Waste, the Center for Economic Justice, Secure Resilient Future Foundation, Fixit Clinic, BigBattery/OutBack Power/TitanGreen, Zero Waste Washington, Plastic Ocean Project, Repair Cafe Hudson Valley, Repair Cafe, Inventurous, Digitunity, and Hamilton Computer Repairs signed the open letter.

Consumer Reports and U.S. PIRG write to ask the FTC to create clear guidance to address the issue of software tethering which leads to several consumer harms, including locking features behind a subscription after the purchase of a device, and companies selling connected devices only to render them nonfunctional later using software. Both switching features to a subscription and “bricking” a connected device purchased by a consumer in many cases are unfair and deceptive practices.

Both practices are examples of how companies are using software tethers in their devices to infringe on a consumer’s right to own the products they buy. While the FTC has taken some limited actions with regard to this issue, a lack of clarity and enforcement has led to an ecosystem where consumers cannot reliably count on the connected products they buy to last. Further measures will help alleviate the worst outcomes of software tethering, that is, making functions of a device reliant on embedded software that ties the device back to a manufacturer’s servers. This software-server connection tethers the device to the manufacturer, giving the manufacturer post-purchase control of the software and changing the nature of ownership.

The group cites examples of recent issues that have cost consumers, taken by Snoo and Spotify.

In the last three months we have seen one business brick a device and another company limit the consumer’s ability to resell their product by locking away features behind a subscription. In July customers who had spent $1,695 on a Snoo connected bassinet discovered that some of the features that originally were advertised with the product would become part of a new, $19.99 monthly subscription. Happiest Baby, which makes the Snoo, told customers in June that it planned to move features such as a weaning mode, sleep tracking, car ride mode, and more to a premium service starting July 15. Customers who already had purchased the bassinet for those features don’t have to pay the monthly fee, but if they want to resell their Snoo or give it to others, the new buyers will not have access to those features. Given the short shelf life of a bassinet and the cost of the Snoo, there is a thriving resale market for the device that Happiest Baby now can monetize.

The group goes on to cite similar examples from Amazon, Mellow, Juicero, Leelo, and Kano. Even established companies, such as Google, are called out for killing off products’ connected support, despite the products still be operational.

As the the group points out, often such decisions are made quickly, with little to no effort made to compensate users.

In some cases the decision to end support for a product is done well with advance notice, refunds, and a plan to recycle the non-working hardware. But in most cases, consumers end up with a hunk of e-waste that could still function with the right software, and a sense of disappointment. Add to this, consumers have spent money on a product without understanding the limited lifespan of that device. Knowledge of the expected lifespan and an understanding that the lifespan was reliant on software, not the physical failure of the device, would certainly change consumers’ purchasing decisions.

The group says they expect the problem to get worse as companies increasingly building smart products that rely on internet connectivity, and asks the FTC to establish clear guidelines. The group outlines a number of measures it recommends the FTC adopt.

• Require disclosure of a guaranteed minimum support time on the product packaging: Companies should plan for and disclose, to the consumer, their plans for both security updates but also anticipated engineering and cloud resources to keep a product functional to a certain date. This date can be extended at the company’s discretion, but should represent the minimum amount of time that the consumer can rely on the product to keep working. The Federal Communications Commission has started down this path with its voluntary U.S. Cyber Trust Mark program that asks those that get the label to include a minimum support date by which consumers can expect to receive security updates, but also allows companies to state that they have no plans to include support time frames. The ability to ignore the requirement to post a minimum support date, and the voluntary nature of the FCC’s program means there is still a sizable opportunity for companies to harm consumers by shutting down or stopping security updates for their connected devices without providing any compensation or even notice to consumers.

Commensurate with mandated minimum support time frames on packaging, the FTC should also help establish minimum support expectations for different classes of devices. Consumers are using trial and error to figure out the expected lifespan of their connected products. But when it comes to cars, large connected appliances, or products installed in homes the agency should establish clear guidelines for an expected lifespan that matches software support to the hardware lifespan.

• Require companies to ensure that the core functionality of a product will work even if the internet connection fails or the software stops getting updated. An e-bike should start without a connection to the server or control from an app. An oven should maintain its ability to heat food and a thermostat should still retain the ability to control an HVAC system.

Encourage tools and methods that enable reuse if software support ends. Companies could create and distribute tools and software to repurpose products so products provide continued use. Tools could include upgrades to hardware so manufacturers can continue software support, or software that would allow consumers to repurpose the hardware for offline use, and should be continually available for the reasonably likely lifespan of the hardware.

• Protect “adversarial interoperability.” One way products can be repurposed is when a competitor or third-party creates a reuse or modification tool — something that adds to or converts the old device. These tools are often the subject of copyright lawsuits. For example, a company could build a tool to rewrite the software on a Sonos speaker, no longer supported by the manufacturer, so that speaker could continue to be used, but because of the legal liability, it is very unlikely a company would risk selling such a tool. Protecting adversarial interoperability incentivizes corporations to provide consumers with reuse options at the end of a product’s life, ensures that entrepreneurs can innovate with alternative reuse options for hardware, and thereby enables competition in the reuse market. The FTC has already come out in favor of allowing exemptions to the copyright law so consumers can repair devices they own. Similar support of adversarial interoperability could revitalize the reuse market and ensure that far less hardware gets trashed when it loses software support.

Conduct an educational program to encourage manufacturers to build longevity into the design of their products. Much like the Cybersecurity Infrastructure and Security Agency has pushed its Secure by Design program to encourage companies to build security into their products from the beginning, we encourage the FTC to create a clear list of design principles that would promote the longevity of the connected products manufacturers sell. These principles could include repairability scores, replaceable batteries, modular electronic elements that allow for aged chips and modems to be swapped out, and requirements to calculate the ongoing cost of supporting every connected device sold. The effort could be modeled on the agency’s 2017 Stick with Security guidance and Start with Security publication that was designed to inform companies about how to safeguard sensitive consumer data.

Ultimately, the group wants the FTC to force companies to support products for a minimum time, as well as allow products to continue to be useful without official support.

Mandating companies include minimum support times on their connected products enables consumers to make informed choices about which products to purchase. Clear communications around the expected lifespan of connected products will help manufacturers allocate resources for their connected products and help regulators recognize egregious examples of software obsolescence. It will also help consumers understand the tradeoffs they may be making when they choose a connected product over a “dumb” one.

When possible, providing consumers with the tools to continue using their connected devices absent official support will help keep waste out of landfills and maintain the consumers right of ownership of a physical product. When providing those tools are impossible, the agency should consider those product subscriptions to be sold and marketed accordingly .

For the sake of consumers, hopefully the FTC will take the group’s recommendation to heart.

In an essay for Business Insider, Suzanne Hayes describes the challenges she faced when she was notified that her landlord was selling the house she and her two children rented, forcing her to look for a new home.

So, I hit Zillow. Two bedrooms, 1,000 square feet, $2,700 a month. Three bedrooms, 1,200 square feet, $3,000 a month. The prices were outrageous and well beyond my budget. When I finally found a place that left me feeling positive, my application was denied because my credit was subpar.

After turning down an offer to move back in with her mom, Hayes began looking at hotels that offered long-term rentals, receiving a response from Avon Old Farms Hotel.

“We have a two-bedroom apartment on-site that we rent out for longer stays. It’s $2200 a month and includes all utilities and hotel amenities,” the email said.

Not only did the novelty of living in a hotel thrill her kids, but there were tangible benefits over a traditional apartment.

After taking a look at the apartment, I signed on the dotted line. Quickly after moving in, I was told the cleaning team would be coming every Tuesday to do a deep clean, change the bedding, and swap out our used towels with clean ones. The gift of having towels laundered and stocked on top of the weekly cleaning was going to be the greatest gift in the world for me.

The hotel’s other amenities quickly became favorites for all three.

They quickly discovered that the hotel restaurant hosted trivia every Thursday night, and it has since become our favorite weekly activity. We swim on hot days, cook s’mores at the firepits on the weekends, and enjoy continental breakfast in the mornings.

Hayes experience is far from unique. Around the US, markets have reached the point where middle-class families are being priced out of cities, towns, and communities they grew up in. To make matters worse, while it is possible rent prices may fall, the reality is that it is unlikely. This is especially true in high-demand markets, such as tech centers around the country.

In the meantime, hotels may find themselves in a unique position to offer hard-working Americans another option, one that comes with benefits all its own.

But don’t think Fubo’s backing down anytime soon. With a trial looming that could stretch into 2025 or even 2026, Gandler made it clear that Fubo’s focus is on the now, specifically on the lucrative fall sports calendar. “The ball’s in their court,” Gandler quipped, adding that Fubo is sticking to its guns, aiming for profitability by 2025.

Behind the scenes, Gandler revealed that the streaming behemoths weren’t just playing hardball—they were pulling out all the stops to maintain their stranglehold on the market. Fubo, he claims, was forced to take or leave not just the premium sports content but a bunch of unwanted channels too. “We were dealing with excessive above-market rates and forced bundling of channels,” Gandler said, slamming the tactics as anti-competitive.

Gandler isn’t here to mince words, especially when it comes to the dirty tactics used by legacy cable TV. He pointed out that these old-school strategies are now being dragged into the streaming era, but he’s not having it. “We’ve been denied the opportunity to offer a skinny bundle to consumers since 2015,” Gandler fumed, slamming Warner Bros. Discovery for refusing to play fair.

Despite offering the same terms as the competition, Fubo found itself locked out of key deals with Turner and TBS. “This is about keeping it for themselves,” Gandler said, calling out the industry giants for trying to monopolize the streaming landscape.

Looking forward, Gandler teased Fubo’s next move, hinting at the possibility of a sports-only package in the future. But he’s got bigger plans. Fubo’s “super aggregation strategy” aims to attract customers at all price points, from free services to the so-called “fat bundle” that could cost over $85. “There’s a huge opportunity here,” Gandler declared, making it clear that Fubo isn’t just playing in the App Store business—it’s gunning for the whole streaming market.

And when it comes to adding major players like Disney Plus or Max to those bundles, Gandler said Fubo’s been asking—but so far, the big names aren’t biting. “Our backs were against the wall,” Gandler admitted, but he’s not worried. He warned that with less competition, prices will only keep climbing—citing Disney Plus as an example, which has seen prices double in the last four years.

In the end, Gandler’s message is clear: Fubo is here to fight for the viewers, and he’s not backing down from a showdown with the streaming titans. “Consumers deserve better,” Gandler said, and it looks like Fubo is ready to deliver.

How Will Fubo Compete for Viewers?

Fubo, under the leadership of CEO David Gandler, is positioning itself to be a formidable player in the highly competitive streaming industry by focusing on a few key strategies that set it apart from the competition.

1. Sports-Centric Focus:

Fubo has carved out a niche as a sports-focused streaming service, differentiating itself from general entertainment platforms like Netflix or Disney Plus. By offering extensive live sports coverage, including niche sports that aren’t always available on other platforms, Fubo aims to attract and retain a loyal customer base of sports enthusiasts. Gandler has hinted at the potential for a sports-only package, which could appeal to hardcore fans looking for a tailored experience.

2. Super Aggregation Strategy:

Fubo isn’t just sticking to sports; it’s embracing a “super aggregation” strategy, which means offering a wide range of content packages that cater to different consumer needs and price points. This could range from free services to premium bundles, giving consumers flexibility in how they access content. By doing so, Fubo hopes to attract a broader audience beyond just sports fans, appealing to those who want more variety but still value live sports as part of their streaming experience.

3. Strategic Partnerships and Negotiations:

Fubo is actively engaging in negotiations to expand its content offerings, including efforts to bring major players like Disney Plus and Max into its ecosystem. Although these discussions have been challenging, with Gandler citing resistance from these major networks, Fubo is determined to keep pushing for deals that will enhance its content library and make its platform more attractive to consumers.

4. Fighting for Consumer Choice:

Gandler has been vocal about the importance of offering consumers choice and affordability in the streaming market. Fubo’s approach includes pushing back against industry practices that limit competition, such as forced bundling of unwanted channels. By standing up for consumer rights and advocating for more transparent and flexible content offerings, Fubo positions itself as a consumer-friendly alternative to traditional cable and larger streaming giants.

5. Financial Discipline and Profitability:

Gandler has set a clear goal for Fubo to achieve profitability by 2025. This focus on financial health is crucial for the company as it navigates the competitive and often costly streaming landscape. By balancing growth with profitability, Fubo aims to ensure its long-term sustainability and success in the market.

6. Embracing Innovation and Technology:

Fubo is also looking to leverage the latest technology to enhance its service offerings. This includes integrating new features that improve the user experience, such as personalized recommendations, enhanced streaming quality, and potentially, incorporating AI-driven insights to better understand and serve its audience.

In summary, Fubo’s strategy to compete in the streaming industry revolves around its sports-centric focus, flexible content offerings, strategic partnerships, advocacy for consumer choice, commitment to profitability, and embrace of innovation. By staying true to these core strategies, Fubo aims to solidify its position as a leading player in the streaming wars, offering something distinct and valuable to consumers.

The Biden administration has been cracking down hard-to-cancel subscription fees, with the FTC recently suing Adobe over the practice.

In a fact sheet, White House officials make clear that “Time Is Money” is a comprehensive effort to tackle subscription fees.

Today, President Biden and Vice President Harris are launching “Time Is Money,” a new governmentwide effort to crack down on all the ways that corporations—through excessive paperwork, hold times, and general aggravation—add unnecessary headaches and hassles to people’s days and degrade their quality of life.

Americans are tired of being played for suckers, and President Biden and Vice President Harris are committed to addressing the pain points they face in their everyday lives. The Administration is already cracking down on junk fees—those hidden costs and surcharges in everything from travel to banking services—that hit people in their pocketbooks. Now the Biden-Harris Administration is taking on the corporate practice of giving people the run around, wasting their precious time and money.

The fact sheet calls out companies for deliberately making it difficult to cancel subscriptions, cash in rebates, and or secure a refund.

The initiative will tackle several specific areas:

• Cracking down on customer service “doom loops.” Too often customers seeking assistance from a real person are instead sent through a maze of menu options and automated recordings, wasting their time and failing to get the support they need. In a recent survey, respondents said that being forced to listen to long messages before being permitted to speak to a live representative was their top customer service complaint. To tackle these “doom loops,” the Consumer Financial Protection Bureau (CFPB) will initiate a rulemaking process that would require companies under its jurisdiction to let customers talk to a human by pressing a single button. The FCC will launch an inquiry into considering similar requirements for phone, broadband, and cable companies. HHS and DOL will similarly call on health plan providers to make it easier to talk to a customer service agent.
• Ensuring accountability for companies that provide bad service. People shopping for products or services should be able to rely on customer reviews to assess which companies will provide streamlined service and not waste their time. The FTC has proposed a rule that, if finalized as proposed, would stop marketers from using illicit review and endorsement practices such as using fake reviews, suppressing honest negative reviews, and paying for positive reviews, which deceive consumers looking for real feedback on a product or service and undercut honest businesses.
• Taking on the limitations and shortcomings of customer service chatbots. While chatbots can be useful for answering basic questions, they often have limited ability to solve more complex problems and disputes. Instead, chatbots frequently provide inaccurate information and give the run-around to customers seeking a real person. The CFPB is planning to issue rules or guidance to crack down on ineffective and time-wasting chatbots used by banks and other financial institutions in lieu of customer service. The CFPB will identify when the use of automated chatbots or automated artificial intelligence voice recordings is unlawful, including in situations in which customers believe they are speaking with a human being.
• Helping streamline parent communication with schools. Between communicating with teachers, viewing school policies, completing forms and permission slips, and more, school processes, platforms, and paperwork can sometimes be a hassle for families that already have a lot on their plates. The Department of Education will issue new guidance to schools on how they can help make these processes less time-consuming for parents to handle, and to build effective family engagement through two-way communications. This will include new resources for schools to address time-wasting technology and offer more streamlined processes for engaging and communicating with parents.

“Time Is Money” looks to be one of the most comprehensive attempts to reign in bad-faith practices that have become all too common in business.

In a podcast appearance with The Verge’s EIC Nilay Patel, Faber discussed an early version of what she dubbed the “forever mouse.”

The other day, in Ireland, in our innovation center there, one of our team members showed me a forever mouse with the comparison to a watch. This is a nice watch, not a super expensive watch, but I’m not planning to throw that watch away ever. So why would I be throwing my mouse or my keyboard away if it’s a fantastic-quality, well-designed, software-enabled mouse. The forever mouse is one of the things that we’d like to get to.

Needless to say, the concept did not go over well with users. After the predictable backlash, Logitech is quickly backtracking from Faber’s statements on the topic.

“There are no plans for a subscription mouse,” Logitech communications head Nicole Kenyon told The Verge in a followup statement.

Subscriptions have become a growing pain point for many users, as software, services, and even hardware have increasingly moved to a subscription model. Add in a growing number of streaming services, and “subscription fatigue” is taking its toll.

It’s reassuring to hear that Logitech is backing off of its “forever mouse” plans—at least for now. Hopefully, the company doesn’t revive the concept.

Netflix has been working to monetize its customers base more, raising prices, cracking down on password sharing, and now eliminating the Basic plan. According to CNN, Netflix was previously allowing existing Basic customers to continue using the plan, although new customers could not sign up for.

The company is now ending the plan altogether, in both the US and France. Netflix had already retired the Basic plan in the UK and Canada.

Users looking to migrate from the $11.99 Basic plan—and maintain an ad-free experience—must now pay $15.49 for the Standard plan or $22.99 for the Premium plan. The cheapest option is the Standard With Ads plan that comes in at $6.99.

Carriers often require lock phones to their network, keeping them locked for months, or even years. The practice is designed to discourage customers from switching to a rival service. Unfortunately, it also inhibits other options. For example, Android users wanting to install a more secure version of Android—such as GrapheneOS or CalyxOS—cannot do so unless the phone is unlocked.

The FCC is tackling this issue, proposing a new rule that would require providers to unlock customers’ phones within 60 days.

The Federal Communications Commission today proposed that the agency require mobile service providers to unlock customers’ mobile phones within 60 days of activation. Expanded unlocking requirements would establish a clear and uniform set of requirements for all mobile service providers. New unlocking rules would allow consumers the freedom to take their existing phones and switch from one mobile service provider to another more easily, as long as the consumer’s phone is compatible with the new provider’s wireless network.

Mobile phone unlocking can increase consumer choice and competition in the mobile service provider marketplace. Updated unlocking rules would give consumers more flexibility when switching service providers, increase competition among service providers, and reduce customer confusion by applying the same unlocking rules to all service providers.

“So much about these devices has changed in such a short time,” said FCC Chairwoman Jessica Rosenworcel. “In fact, it was not that long ago when unlocking a mobile handset—which lets you take your phone with you to any wireless provider you choose—violated copyright law. I think that is crazy. A lot of consumers thought so, too. Because a decade ago a petition landed at the White House demanding change. Congress took up the call and passed the Unlocking Consumer Choice and Wireless Competition Act. The law made clear consumers were not doing anything illegal when they used their old phone to sign up for service with a new provider. This was good for consumers and good for competition.

“But sweeping out the dusty remnants of copyright law was not enough. Because despite the efforts of Congress to address unlocking in this law, the efforts of the Federal Communications Commission to reinforce it in spectrum auctions and transactions, and the efforts of the Department of Justice to impose it as a merger condition, restrictions on consumers unlocking their phones have persisted.

“It is time to end them once and for all. You bought your phone, you should be able to take it to any provider you want.

Rosenworcel took aim at T-Mobile, without mentioning the company by name, after it increased the unlock period for its Metro brand to 365 days from the original 180.

“Some providers already operate this way. Others do not,” Rosenworcel said. “In fact, some have recently increased the time their customers must wait until they can unlock their device by as much as 100 percent. Enough. We can put in place a nationwide standard because it is in the best interest of consumers and competition. So today we propose that all mobile wireless service providers unlock phones 60 days after the device is activated and we seek public comment on doing so. This is simple. This is clear. This is how we build a digital future that works for everyone.”

According to a report by Bloomberg’s Mark Gurman, Apple may be planning to charge for top-tier A.I. features, much like it does for some iCloud features.

There’s an opportunity to turn AI features and other software into paid services, but it will take time. Though Apple Intelligence will be free to start, the long-term plan is to make money off the capabilities. The company could eventually launch something like “Apple Intelligence+” — with extra features that users pay monthly fees for, just like iCloud. On top of that, Apple will get a cut of the subscription revenue from every AI partner that it brings onboard.

If it all comes together, Apple could find itself in a strong position in a few years. The company will be less reliant on hardware tweaks to drive its business and will actually be making money from AI — something everyone in Silicon Valley is hoping to pull off.

Apple has increasingly been ramping up its services in an effort to be less reliant on constant hardware upgrade cycles for its revenue. The effort has been largely successful, with services comprising an ever-larger share of Apple’s income year-to-year.

Unlike many companies rolling out AI-based features—where such feature seem like a solution in search of a problem—Apple demonstrated the real-world benefits that can be had from integrating AI. As a result, the company could easily open up an entirely new revenue stream as its A.I. features continue to evolve and offer consumers an improved experience.

Kickstarter is one of the leading crowdsourcing platforms, giving individuals the opportunity to support ideas and projects that interest them. Traditionally, once a campaign ended, there was no direct way for supports to continue to make contributions directly through Kickstarter. Some projects turned to third-party options for ongoing support, but now Kickstarter has eliminated the need to take that extra step.

The company announced the change in a blog post:

The end of a campaign shouldn’t mean the end of support.

In April, a select group of Creators started testing Late Pledges, a new feature that allows Creators who successfully hit their funding goal to continue collecting pledges after their campaign officially ends.

In the past, Creators have turned to third-party services to collect funds post-campaign but our Late Pledges feature is integrated directly into Kickstarter, erasing the need for third-party players and embedding a streamlined process right where your community is already supporting you.

The early results have been really promising: Within two weeks, one Creator raised an additional 35% of their original goal with Late Pledges.

Today, Late Pledges is now available to all Kickstarter Creators globally. Now, every Creator that successfully meets their funding goal has the opportunity to keep the momentum going, keeping the door open for more support, more Backers, and more success post-campaign.

The announcement is good news for creators and their supporters, providing a way for individuals to continue helping their favorite projects.

Streaming Business Progress Amid Criticism

Disney’s streaming unit reported a loss of $18 million in the March quarter, a substantial improvement from the $659 million loss in the same quarter a year earlier. CEO Bob Iger emphasized the company’s challenges in reaching streaming profitability despite this progress.

“Our strong performance in Q2 demonstrates we are delivering on our strategic priorities while building for the future,” Iger said during an earnings call. “Overall, this was another impressive quarter for us, with adjusted earnings per share up 30% compared to the prior year.”

Iger remains confident in Disney’s ability to achieve profitability in its streaming business by the end of the fiscal year. He reiterated that this achievement won’t follow a strictly linear path, noting that “we are anticipating a softer third quarter due in large part to the seasonality of our India sports offerings, but we fully expect streaming to be a growth driver for the company in the future.”

Disney+, the company’s flagship streaming service, added over six million subscribers in the March quarter, driven by the popular series Bluey and movies like Wish. However, the overall streaming portfolio, which includes Disney+, ESPN+, and a majority stake in Hulu, saw total subscribers rise modestly to 153.6 million from 149.6 million in December.

Disney is also working to increase and deepen customer engagement with its streaming offerings by limiting password sharing, improving its recommendation engine, and integrating new content tiles. Iger emphasized the importance of these initiatives, particularly the addition of Hulu and ESPN tiles to Disney+.

“In March, we successfully launched Hulu on Disney+, bringing extensive general entertainment content to the platform for bundle subscribers,” he explained. “And by the end of this calendar year, we will add an ESPN tile to Disney+, giving all U.S. subscribers access to select live games and studio programming within the Disney+ app.”

To curb improper password sharing, Disney will begin cracking down on unauthorized account sharing for Disney+ next month in select markets, with a global rollout planned for September.

“Obviously, we’re heartened by the results Netflix has delivered in cracking down on password sharing,” Iger noted. “We believe that it will be one of the contributors to growth.”

Despite making progress toward profitability, Disney’s streaming businesses face continued scrutiny. The company’s earnings guidance raised adjusted earnings per share growth to 25%, just shy of Wall Street’s expectation of 25.3%. Critics like Jeremy Hambly from The Quartering highlight the losses, calling Disney’s approach “woke” and attributing the financial issues to the company’s content choices.

“Disney has now lost $20 billion in market cap. Get woke, go broke. That’s right, Disney,” Hambly said.

However, CFO Hugh Johnston struck a more positive note, pointing to Disney’s long-term strategy.

“We’ve got a lot of levers that give us strong reasons to believe that there’s good growth in front of us,” Johnston said on the earnings call. He cited the crackdown on password sharing and Disney’s growing streaming portfolio as key components of the company’s growth strategy.

“We continue to expect our combined streaming businesses to be profitable in the fourth quarter and expect further improvements in profitability in fiscal 2025,” he added.

Is Disney Awake on Woke?

Disney has long been regarded as a cultural touchstone, influencing generations with its family-friendly entertainment and theme park experiences. In recent years, however, the company has faced mounting criticism over its perceived alignment with progressive ideologies and inclusivity initiatives. This critique, often summarized with the phrase “go woke, go broke,” has been amplified by political commentators and has ignited intense debates over Disney’s creative direction and corporate values.

Box Office Backlash

Critics argue that Disney’s pursuit of progressive themes has led to a string of box office disappointments. Films like Lightyear and Strange World, criticized for their overt messaging, failed to meet expectations, contributing to Disney’s nearly $1 billion in film losses in 2023 alone. Furthermore, Indiana Jones and the Dial of Destiny and The Marvels received mixed reviews and underperformed financially, signaling potential challenges in appealing to a broader audience.

The YouTube channel TheQuartering, known for criticizing Disney’s “woke” agenda, recently highlighted the company’s market cap loss of nearly $20 billion, arguing that audiences have grown weary of being “preached to.” The host noted, “Disney has now lost $20 billion in market cap. Holy smokes. Can I get a ‘get woke, go broke?’”

Disney’s Response to Critics

Despite the criticism, Disney remains resolute in its commitment to diverse and inclusive storytelling. CEO Bob Iger has consistently emphasized the importance of reflecting global audiences and fostering inclusivity in Disney’s creative output.

“We are committed to telling stories that resonate with diverse audiences around the world,” Iger said. “Our mission is to deliver content that not only entertains but also inspires and reflects the rich diversity of our global audience.”

In response to recent box office struggles, Disney has reassessed its creative strategy, reducing the output of underperforming franchises while emphasizing quality over quantity. The company announced plans to scale back Marvel releases to two or three films per year while reducing the number of Marvel TV series on Disney+.

Content and Profitability

Disney’s effort to cater to progressive audiences has also impacted its streaming services. While Disney+ achieved profitability for the first time in the March quarter, it fell short of analyst expectations, partly due to password sharing and increased competition.

“We have a responsibility to balance creative expression with profitability,” Iger noted. “While we believe in inclusivity, we are also focused on delivering content that attracts and retains a diverse subscriber base.”

Navigating Cultural Sensitivities

The company’s progressive stance has affected its creative output and led to high-profile conflicts with conservative politicians. Disney’s opposition to Florida’s Parental Rights in Education bill, known as the “Don’t Say Gay” law, resulted in a protracted legal battle with Governor Ron DeSantis.

“Disney’s fight with DeSantis has only further polarized the perception of the company,” said political analyst Alex Harris. “While it won the support of progressive audiences, it alienated some traditional Disney fans.”

Balancing Act

Disney’s quest to balance inclusivity with financial success is a complex challenge that continues to unfold. Critics argue that Disney has overcorrected in its pursuit of progressive themes, while supporters maintain that inclusive storytelling is essential for the company’s future.

“There’s a fine line between staying relevant and alienating core audiences,” media analyst Jessica Ehrlich remarked. “Disney must navigate this cultural divide carefully, ensuring that its creative direction appeals to a broad spectrum of viewers.”

Looking Forward

As Disney moves forward, the company aims to strike a balance between its progressive values and commercial success. By reducing output, focusing on quality storytelling, and carefully navigating cultural sensitivities, Disney hopes to redefine its creative direction while staying true to its inclusive ethos.

“We remain focused on delivering exceptional stories that connect with audiences worldwide,” Iger affirmed. “Inclusivity and profitability are not mutually exclusive, and we believe we can achieve both.”

While critics and supporters remain divided over Disney’s approach, one thing is clear: industry peers and audiences alike will watch closely as the company journeys toward a more inclusive and profitable future.

ESPN and Sports Segment

While Disney’s streaming businesses were a focal point, the sports segment also garnered significant attention during the earnings call, given its critical role in its overall growth strategy. ESPN and the broader sports segment were particularly affected by rising programming and production costs due to the timing of College Football Playoffs. Operating income for sports fell by 2% to $778 million despite a 2% increase in revenue to $4.31 billion.

During the call, CEO Bob Iger emphasized the importance of live sports in attracting and engaging audiences, highlighting ESPN’s role in driving growth and viewership.

“I see sports continuing to shine in a world with considerably more choice. Live matters,” Iger said. “Sports generally are driving higher engagement with streaming subscribers, and recent ratings wins across a variety of sports have proven this.”

ESPN saw a particularly strong April, achieving its highest primetime viewership for that month on record. The NCAA Women’s Final Four set a new viewership record, with the championship game between Iowa and South Carolina becoming ESPN’s most-watched college basketball game ever, regardless of gender. Furthermore, the NFL postseason broke viewership records, and Monday Night Football had its most-watched season since 2000.

Iger also underscored the strategic importance of sports in Disney’s direct-to-consumer strategy, noting that ESPN will be adding a tile on Disney+ before the end of the year. This will give all U.S. subscribers access to select live games and studio programming within the Disney+ app.

“We see this as a first step to bringing ESPN to Disney+ viewers, as we ready the launch of our enhanced standalone ESPN streaming service in the fall of 2025,” Iger noted.

Given the growing value of sports content, ESPN is also engaged in high-stakes negotiations with the NBA for a new rights package. Iger expressed optimism about securing a long-term deal that aligns with the company’s best interests.

“We’re confident or optimistic we’re going to end up with an NBA deal that will be long-term in our best interest and the best interest of our subscribers,” he said.

However, challenges remain, particularly in ESPN’s traditional linear business, which suffers from declining viewership and lower affiliate revenue due to cord-cutting.

Hugh Johnston, Disney’s CFO, acknowledged these challenges but emphasized that the company is well-positioned to navigate them due to its extensive sports rights portfolio.

“First of all, we’ve locked up long-term deals with significant sports organizations, including the college football championships, all the NCAA championships, and the NFL,” Johnston said. “We’re also confident that our strategic partnership with Fox and Warner Bros. Discovery on a new sports-streaming service will drive growth.”

In addition to these partnerships, Disney’s sports business includes ESPN+ and a majority stake in Hulu, home to popular sports-themed shows like Shōgun and The Bear. Iger emphasized leveraging the company’s entire portfolio to maximize this content’s potential.

“Our linear channels are deeply embedded in our direct-to-consumer strategy, as they continue to deliver high-quality content that reaches demographics not captured on streaming alone,” he said.

With these strategic moves, Disney aims to maintain its leadership in the sports entertainment segment and ensure ESPN remains a key driver of growth and profitability.

Star India and the Impact of Cricket Rights

Disney’s global sports ambitions took a hit in the most recent quarter due to significant challenges its Star India subsidiary faced and the loss of critical cricket broadcasting rights. The company took a $2 billion impairment charge related to its Star India operations and linear television networks, swinging Disney to a loss of $20 million for the quarter, compared to a net income of $1.27 billion in the same period last year.

Star India, once considered a crown jewel in Disney’s 2019 acquisition of 21st Century Fox, encountered significant challenges after losing key cricket rights. These rights had previously attracted a substantial audience to Hotstar’s streaming platform. With the loss of the Board of Control for Cricket in India (BCCI) rights, Disney+ Hotstar saw many customer cancellations. The impairment charge reflects that the value of Star India is now approximately $2 billion less than its initial purchase price.

Disney CFO Hugh Johnston explained the impact of losing cricket rights: “The impairment indicates that the India business is today valued at about $2 billion less than when Disney first purchased it. Losing key cricket rights undoubtedly affected subscriber growth for Disney+ Hotstar.”

Despite these challenges, Johnston noted that Disney remains committed to the Indian market and is working to stabilize Star India’s business by enhancing its programming mix. The company is also exploring strategic partnerships to revitalize growth.

“We’re focused on diversifying the content portfolio on Disney+ Hotstar to offer a broader mix of sports, entertainment, and local programming,” Johnston said. “We’ve already seen a positive response to our new programming initiatives and are confident that we can regain traction.”

Moreover, Bob Iger highlighted the company’s intent to remain competitive in India’s burgeoning streaming market by improving customer engagement and leveraging Disney’s rich global content library.

“We have prioritized efforts to deepen customer engagement, including limiting password sharing and improving the recommendation engine on Disney+ Hotstar,” Iger stated. “We’re also integrating a new Hulu tile and planning to add an ESPN tile to Disney+ before the end of the year.”

However, the company anticipates further losses in the third quarter for its entertainment direct-to-consumer business due to the cost of the International Cricket Council (ICC) cricket rights. The ICC rights are crucial for maintaining Star India’s competitive edge, and Disney is banking on these rights to revitalize Hotstar’s subscription growth.

“We remain optimistic about the potential of Star India and Disney+ Hotstar,” Iger emphasized. “Sports, particularly cricket, will continue to be a strategic focus for us in the region, and we’re taking steps to ensure we’re well-positioned for future growth.”

In addition to cricket rights, the company also focuses on improving profitability through cost rationalization and strategic partnerships with local players.

“We’re committed to improving operational efficiency at Star India while exploring new partnerships to enhance our content offerings,” Johnston added. “Ultimately, we believe these efforts will help us achieve sustainable profitability in this market.”

Despite recent setbacks, Disney remains determined to maintain a strong presence in India, recognizing the immense potential of its fast-growing streaming audience.

Theme Parks and the Magic Kingdom’s Post-COVID Magic

Disney’s theme parks, a cornerstone of the company’s profitability, remain a vital part of its business. Despite revenue increasing 10% to $8.39 billion for the March quarter and operating income rising 12% to $2.29 billion, there are growing concerns over the sustainability of this growth. Bob Iger acknowledged the parks segment’s challenges in maintaining post-COVID demand while navigating rising costs.

“We’re seeing some evidence of a global moderation from peak post-COVID travel, and this is impacting demand at our parks,” Iger stated during the recent earnings call. “However, we’re still confident in the long-term growth potential of our parks and experiences business.”

The Magic Kingdom and its broader experiences segment are fundamental to Disney’s profitability, but the company noted that operating income for the segment is expected to be flat in the June quarter, a significant deviation from analyst expectations of 12% year-over-year growth. Factors influencing this include pre-opening expenses for the new Disney Treasure and Disney Adventure cruise ships and higher labor expenses due to inflation.

“Rising wage expenses and inflation continue to weigh on near-term profitability,” said Disney CFO Hugh Johnston. “However, we’re confident that demand remains healthy, and we’re already seeing bookings showing strong growth for the remainder of the year.”

Despite these headwinds, Disney is optimistic about its strategic investments in the experiences segment. The company recently launched its Disneyland Forward initiative to expand the Disneyland Resort in California with new attractions and immersive experiences. Meanwhile, Disney Cruise Line is gearing up to introduce Lookout Cay, a new private island destination, along with two new cruise ships.

“Our investments in the Disneyland Forward initiative, the expansion of Disney Cruise Line, and our long-term plans for Walt Disney World will turbocharge growth in this segment,” Iger emphasized. “We’re working to bring new and compelling stories to life across all our parks and experiences, ensuring that guests have magical experiences that will keep them coming back.”

Additionally, Disney remains focused on optimizing guest experiences through its Genie+ and Lightning Lane services, which provide guests with more personalized itineraries and shorter wait times for popular attractions. The company is also investing heavily in technology to enhance the customer journey, from mobile ordering at restaurants to virtual queues at attractions.

“Enhancing the guest experience is at the core of everything we do,” Iger remarked. “Our technology investments and strategic pricing adjustments are designed to ensure that every guest has a magical and memorable visit, regardless of the park they visit.”

Disney has a slate of highly anticipated theme park expansions and projects that will help maintain its leadership position in the global theme park industry. The planned opening of new attractions tied to popular franchises like “Avatar” and “Indiana Jones” is expected to draw significant interest.

“Avatar, Moana, and Indiana Jones are just a few of the stories we’re bringing to life in our parks,” Iger noted. “These projects will continue to set Disney apart and keep the magic alive for millions of guests worldwide.”

However, challenges remain as the company grapples with inflationary pressures, evolving consumer preferences, and growing competition from rival Universal Studios, which plans to open a new theme park in Orlando next year.

“Universal’s expansion highlights the increasing competition in the industry,” Johnston stated. “But we’re confident that our unmatched storytelling, innovative technology, and focus on quality will ensure that Disney remains the premier destination for families worldwide.”

Despite the uncertainties, Disney’s long-term investment in its parks, cruises, and resort experiences positions the company to capture continued growth in the global travel and leisure industry, which is still recovering from the effects of the pandemic.

Cost-Cutting and Content Strategy

Amid the challenges in streaming and theme parks, Disney has been actively pursuing cost-cutting measures to streamline its business and improve profitability. Since returning as CEO, Bob Iger has made significant strides in implementing a leaner organizational structure and focusing on quality over quantity in the company’s content strategy.

“We’re firmly committed to achieving sustainable profitability,” Iger said on the recent earnings call. “Our restructuring efforts and strategic focus on high-quality content have positioned us well for the future.”

Disney recently announced a plan to cut $7.5 billion in annual costs, including reducing its workforce by approximately 7,000 employees. These cost-cutting measures will primarily affect the company’s marketing, administrative, and content production divisions. The aim is to shift resources toward high-impact projects with the greatest profitability potential.

Disney’s CFO Hugh Johnston emphasized these efforts’ significance: “We’ve already achieved considerable progress in our cost-efficiency initiatives. Our new organizational structure and reduced content spend will provide us with greater flexibility to navigate a dynamic market.”

In the content production segment, Disney is reevaluating its slate of projects, particularly at Marvel and Lucasfilm, to focus on fewer high-quality productions. “We’ve been working with the studio to reduce output and focus more on quality, particularly within our Marvel projects,” Iger said. “Reducing the number of films and series allows us to concentrate on developing exceptional stories that resonate with audiences.”

This shift was evident in Disney’s decision to limit its Marvel Cinematic Universe releases to two or three films per year and reduce the number of Marvel series on Disney+ from four to two. Iger explained that the company wants to reinvigorate the Marvel brand by returning to a model that prioritizes event-level releases, like “Avengers: Secret Wars” and “Deadpool & Wolverine.”

“At Marvel, we are reimagining our approach to storytelling by ensuring that every film and series we produce is unique and impactful,” Iger noted. “With reduced output, we can dedicate more time and resources to creating compelling, high-quality content.”

Additionally, Disney is banking on the power of its legacy franchises, such as Star Wars, Indiana Jones, and Avatar, to drive both box office and streaming revenues. With new projects in development for each brand, the company aims to captivate audiences across all age groups.

“Kingdom of the Planet of the Apes” is set for release this weekend, while Pixar’s “Inside Out 2” and Marvel’s “Deadpool & Wolverine” are slated for later this year. Iger remains optimistic about the company’s upcoming slate: “Our studios continue to deliver top-tier content that resonates with audiences globally.”

Meanwhile, Disney is exploring potential licensing opportunities to generate additional revenue from its vast content library. While exclusive streaming rights remain crucial to driving subscriber growth on Disney+, Hulu, and ESPN+, Iger noted the strategic benefits of third-party licensing.

“We’re being more expansive in our thinking about content licensing,” Iger said. “We recognize that certain opportunities can amplify the value of our IP and create new revenue streams.”

However, the company remains committed to maintaining the core of its marquee content on its streaming platforms, leveraging the power of its library to bolster engagement and retain subscribers.

“Ultimately, our goal is to strike the right balance between licensing and exclusivity, ensuring that our streaming platforms continue to offer a unique and compelling experience for our customers,” Iger emphasized.

By optimizing its cost structure and refining its content strategy, Disney aims to navigate the turbulent media landscape and return to sustainable growth across all business segments.

Looking Forward

As Disney embarks on its journey toward sustainable profitability, it faces several challenges and opportunities that will define its future. CEO Bob Iger remains optimistic about the path ahead and has outlined a strategic plan that leverages Disney’s extensive content library, strong brand portfolio, and innovative technological capabilities.

Streaming Business Profitability In the streaming segment, Disney remains focused on achieving profitability by the end of fiscal 2024. Iger emphasized the importance of subscriber growth and retention through high-quality content, a revamped user interface, and innovative technological solutions like password-sharing crackdowns.

“We’re on track to deliver profitability in our combined streaming business in the final quarter of this fiscal year,” Iger stated. “By enhancing the Disney+ experience with Hulu and ESPN tiles and cracking down on password sharing, we expect to see a significant boost in engagement and revenue.”

Disney also prioritizes advertising revenue by expanding its ad-supported tier across streaming platforms. CFO Hugh Johnston noted, “Our ad tier subscriber growth is encouraging, and we continue to invest in improving our recommendation engine and direct-to-consumer marketing efforts.”

ESPN’s Transition to Digital With ESPN preparing to launch its standalone streaming service in 2025, the company is paving the way for a new era of sports consumption. “ESPN will continue to be a premier destination for sports fans worldwide,” Iger said. “By offering a seamless blend of linear and digital programming, we believe the ESPN flagship streaming service will redefine sports viewing.”

The ESPN tile on Disney+ is expected to engage current subscribers and offer a glimpse into ESPN’s broader sports ecosystem, driving further interest in the standalone service. “We’re confident that the ESPN streaming service will deliver a compelling experience, building on the success of our existing ESPN+ platform,” Johnston added.

Reinvigorating Content Strategies In the coming years, Disney’s studios will focus on revitalizing their major franchises while exploring new and original stories that captivate audiences. The balance between sequels and fresh IP will maintain relevance across age groups and drive box office and streaming revenues.

“We are reducing output to prioritize quality over quantity,” Iger explained. “Whether it’s Marvel, Star Wars, or Pixar, our goal is to deliver memorable stories that resonate deeply with our audience.”

Disney’s strategic decision to limit Marvel releases to two or three films per year while reducing the number of Marvel series on Disney+ reflects this commitment to quality storytelling.

Expanding International Presence Despite recent challenges in India, Disney is determined to expand its international footprint. The new partnership with Reliance Industries and Viacom18 is expected to help Disney regain lost ground and provide a framework for future international collaborations.

“Our partnership in India will enable us to explore new markets while ensuring profitability and growth for Disney+ Hotstar,” Johnston said.

Reviving the Magic at Theme Parks While the theme park segment faced setbacks due to COVID-19 and economic challenges, Disney remains confident in the resilience of its experiences business. With new attractions and immersive experiences on the horizon, the parks division is poised for continued growth.

“Theme parks are a cornerstone of our business,” Iger noted. “We’re excited about the future with new attractions like the Disneyland Forward initiative and the Disney Treasure cruise ship.”

Despite moderating post-COVID demand, Disney plans to invest $60 billion over the next decade in parks, cruise lines, and resorts. “These investments will enhance our guests’ experiences and deliver long-term growth,” Johnston said.

Sustained Financial Stability With a clear strategic vision and continued investment in quality content, technology, and international expansion, Disney aims to achieve sustained financial stability. The company is also prioritizing shareholder returns through stock buybacks and dividend payouts.

“We’re committed to delivering long-term value for our shareholders,” Johnston emphasized. “Our cost-efficiency initiatives, combined with strategic investments and content quality, will pave the way for robust earnings growth.”

As Disney navigates the dynamic media landscape, it remains a cultural and entertainment powerhouse committed to delivering exceptional experiences for audiences worldwide.

Profitability Over Popularity

Gone are the days when Silicon Valley’s darling, Netflix, was merely a platform gaining subscribers at the expense of profitability. Today, it is a beacon of robust financial health, directing its growth straight to the bottom line. “This is where it used to be a company that never made money; now it’s a company that’s just spitting off profits,” remarked Mark Douglas, President and CEO of MNTN, during a discussion with Paul Sweeney and Alix Steel on Bloomberg Radio. This pivotal shift in investor focus from subscriber growth to substantive financial returns reshapes how the market views the streaming giant.

Strategic Shifts: Cracking Down on Password Sharing and Ad-Supported Tiers

Netflix’s strategic pivots include rigorous measures against password sharing and the introduction of ad-supported subscription tiers. The crackdown on password sharing, a seemingly low-hanging fruit in policy enforcement, promises significant returns. “It’s highly leveraged—just give a few engineers in a room, and they make it harder to share passwords, which creates a huge amount of growth,” Douglas noted on the potential of these initiatives to legitimately bolster subscriber numbers.

Although ad sales are progressing slower than anticipated, the ad-supported model presents substantial untapped potential. This model offers discounted memberships and opens up a new revenue stream through advertisements, which could be pivotal as the platform seeks to balance content costs with revenue inflows.

Financial Outlook and Industry Comparison

As of the 2024 fiscal outlook, Netflix projects nearly $40 billion in revenue with EBIT margins around 25-26% and a promising free cash flow of $6.3 billion. Such figures reflect a solid business model and set a high benchmark within the streaming sector, which sees traditional media companies floundering, except Disney.

The key to Netflix’s success lies in its ability to scale its subscriber base effectively. “Every incremental user is incremental profit and cash flow,” Douglas stated. He suggests that Netflix’s subscriber base could grow from a quarter billion to half a billion worldwide, a testament to its scalable and profitable model.

Consolidation: The Future of Streaming?

The streaming industry, characterized by various platforms, faces a potential consolidation wave. Unlike Netflix, which has become a default starting point for viewers, much like the cable guide of yesteryears, other platforms lack distinctive identities or sufficient content libraries to stand alone. “You go to Netflix because they have everything…Why do you go to CBS?” Douglas questioned, predicting significant industry consolidation where major players might merge to pool content libraries and compete more effectively with Netflix.

Looking Ahead

As Netflix continues to navigate the challenges and opportunities of the streaming market, its strategies around ad integration, password-sharing policies, and content curation will be critical. The company’s transition from focusing primarily on subscriber growth to maximizing profit margins and cash flow marks a mature, more sustainable phase in its business trajectory.

While Netflix’s road ahead involves navigating competitive pressures and operational execution, its current trajectory suggests it has the potential to remain a leader in the streaming space, setting benchmarks not just in subscriber numbers but also in profitability and strategic innovation.

Reflecting on Disney’s entry into the streaming arena with the launch of Disney+, Iger recalled the early challenges and triumphs of the platform. “In just over four years, we find ourselves second to Netflix in terms of global subscribers for a pure streaming business,” remarked Iger, highlighting the rapid ascent of Disney+ in capturing the hearts and screens of audiences worldwide.

However, Iger acknowledged the initial financial setbacks that Disney’s streaming venture incurred, citing losses of approximately $4 billion annually. Determined to chart a path to profitability, Disney embarked on a strategic overhaul, focusing on cost reduction and revenue optimization. “The goal was, first, let’s reduce those losses. As we’ve said, we will be profitable in our fiscal fourth quarter this year,” Iger explained, underscoring the company’s commitment to achieving sustainable growth.

Looking ahead, Iger outlined Disney’s vision to transform its streaming business into a growth engine, emphasizing user engagement and content innovation. “We have to increase engagement. We need the technological tools to lower churn and create more stickiness,” Iger emphasized, highlighting the importance of leveraging data-driven insights and personalized recommendations to enhance the streaming experience.

As Disney navigates the complexities of the streaming landscape, questions arise about the competitive dynamics and the company’s position vis-à-vis industry peers. While acknowledging the formidable presence of competitors like Netflix, Apple, and Amazon, Iger expressed confidence in Disney’s unique strengths and capabilities. “We know what you need to be successful in streaming, and not everybody has that,” he remarked, reaffirming Disney’s commitment to delivering compelling content and unparalleled user experiences.

Disney’s streaming strategy is a testament to its adaptability and foresight in a rapidly evolving digital landscape. As the company continues to innovate and expand its streaming footprint, one thing remains clear: the battle for streaming supremacy is far from over, and Disney is poised to lead the charge in reshaping the future of entertainment.

Top Ten Things Needed to Make Disney+ Profitable

1. User Engagement: Increasing user engagement through compelling content and personalized recommendations is crucial for retaining subscribers and maximizing revenue.
2. Cost Reduction: Implementing cost-cutting measures to minimize operational expenses and improve profit margins.
3. Content Expansion: Continuously expanding the library of exclusive and original content to attract new subscribers and retain existing ones.
4. International Expansion: Expanding Disney+ into new global markets to tap into a broader subscriber base and drive revenue growth.
5. Technology Investments: Investing in technological infrastructure to enhance streaming quality, user experience, and platform stability.
6. Churn Reduction: Implementing strategies to reduce subscriber churn, such as targeted promotions, loyalty programs, and improved customer service.
7. Advertising Revenue: Exploring opportunities to generate additional revenue through targeted advertising on the platform while balancing user experience and ad load.
8. Partnerships and Licensing Deals: Forming strategic partnerships and licensing agreements to acquire premium content and expand the platform’s offerings.
9. Monetization of Original Content: Disney’s vast intellectual property library will be leveraged to create merchandise, theme park attractions, and other revenue streams tied to original content.
10. Data Monetization: involves leveraging user data to inform content decisions, target advertising, and drive personalized recommendations, thereby increasing engagement and revenue opportunities.

By focusing on these key areas, Disney can position Disney+ for long-term profitability and success in the highly competitive streaming market.

However, with the rise in popularity of audiobooks, Spotify found itself paying book publishers without collecting revenue from users. Consequently, the company has decided to adjust its pricing structure, with users now facing an additional fee of one to two dollars per month, depending on their subscription plan, to continue accessing audiobooks.

The news of Spotify’s move has elicited mixed reactions. Investors’ enthusiasm was reflected in a 6% surge in the company’s shares. This positive response suggests confidence in Spotify’s trajectory toward profitability. However, consumers may view the decision less favorably, perceiving it as another expense in an already crowded subscription landscape.

Introducing a basic plan offering only music and podcasts underscores Spotify’s effort to provide users with more choices. Yet, the question remains for many: What additional value does the new pricing structure offer? With audiobooks previously available for free, subscribers may hesitate to pay extra for content that was once included.

Meanwhile, in entertainment, Ari Emanuel’s decision to take his company, Endeavor, private reflects a strategic maneuver to gain more flexibility. Emanuel’s frustration with the market’s valuation of Endeavor’s diverse assets, including talent agencies and sports betting information, prompted the move to go private. The $25 billion enterprise value assigned by Silverlake marks the largest private equity takeover of a public company in over a decade, signifying significant confidence in Endeavor’s potential.

The transition to a private entity may provide Endeavor with the latitude to reevaluate its assets and potentially divest certain divisions without the scrutiny of public investors. While this move may reduce visibility into Hollywood’s operations, particularly about Endeavor’s activities, it promises to offer Emanuel greater autonomy to navigate the evolving entertainment landscape.

As Spotify and Endeavor embark on these strategic shifts, the entertainment industry braces for the impact of these transformative decisions. With Spotify redefining its pricing model and Endeavor charting a new course as a private entity, the dynamics of the entertainment landscape are poised for change, setting the stage for a future shaped by innovation and adaptability.

As the discussion unfolded, Alex Weprin emphasized the unparalleled influence of Taylor Swift in the entertainment industry, characterizing her as a cultural icon with a devoted global fanbase. The acquisition of the “Eras Tour” movie, reportedly secured for a staggering $75 million, underscores Disney’s strategic move to leverage Swift’s star power in driving new subscribers to its platform.

The “Eras Tour” movie, while not a live event in the traditional sense, promises an immersive experience that aims to transport viewers into Swift’s electrifying concert performances. Weprin noted that this approach aligns with the growing trend towards live and live-ish content in streaming, where platforms seek to engage audiences with captivating experiences that evoke the excitement of being present at the event itself.

This shift towards event programming reflects a broader evolution in the streaming landscape, where platforms increasingly invest in high-profile content to differentiate themselves and attract subscribers. From live sports to concert films, streaming services like Disney Plus, Netflix, and Peacock recognize the value of offering exclusive, must-see events to drive subscriber growth and retention.

Looking ahead, Weprin emphasized the importance of striking a balance between content spend and investment in event programming for streaming platforms. With competition reaching a fever pitch, platforms must carefully curate their content offerings to cater to diverse audience preferences while maximizing the impact of their investments in exclusive events.

Taylor Swift’s “Eras Tour” movie presents a significant opportunity for Disney Plus to capitalize on the immense popularity of one of the biggest names in music and reignite interest in its platform. As the streaming wars continue to unfold, the success of event programming like this will undoubtedly play a pivotal role in shaping the future of the industry and determining the winners in the fiercely competitive streaming landscape.

Andrey Norkin from Netflix, Hassene Tmar from Meta, Boban Kasalovic from United Cloud, and Tim Siglin from Help Me Stream engaged in a candid conversation, sharing their insights and experiences with codec migration. The discussion delved into the motivations behind changing codecs, the complexities of catering to legacy users, and the implications for content delivery platforms.

“For us at Netflix, the decision to migrate to a new codec is driven by our commitment to delivering high-quality content and enhancing the viewing experience for our members. Technological advancements in codecs enable us to achieve better compression and improved visual quality, which are crucial for meeting the evolving demands of our global audience,” stated Andrey Norkin, representing Netflix.

Hassene Tmar, speaking on behalf of Meta, highlighted the role of new codecs in driving innovation and user engagement. “At Meta, we see new codecs as enablers of immersive experiences and innovative features. By leveraging advanced codec technologies, we aim to enhance user engagement and retention, ultimately delivering value to our community of users,” Tmar remarked.

However, transitioning to a new codec presents various challenges, particularly managing legacy infrastructure and ensuring compatibility with existing devices and platforms. Boban Kasalovic, representing United Cloud, emphasized the importance of strategic planning and testing in minimizing disruptions for end users. “Managing legacy infrastructure and ensuring seamless compatibility with existing devices are critical challenges in codec migration. At United Cloud, we prioritize careful planning and testing to mitigate potential disruptions for our users,” Kasalovic explained.

Tim Siglin from Help Me Stream echoed these sentiments, emphasizing the need to balance quality and efficiency in codec migration. “While new codecs offer improved compression and visual quality, they may require more computational resources. Striking a balance between maximizing quality and optimizing bandwidth usage is essential to accommodating users with varying internet connections,” Siglin stated.

In conclusion, the discussion underscored the complexities and considerations involved in codec migration for streaming platforms. While new codecs offer opportunities for innovation and improvement, they also pose challenges regarding compatibility, resource allocation, and user experience. By leveraging their collective expertise and adopting strategic approaches, companies can navigate these challenges and effectively deliver high-quality content to their audiences.

During an interview on CNBC, Mark Mahaney, Head of Internet Research at Evercore ISI, shared insights into the rationale behind the price target adjustment. Mahaney emphasized the pivotal role of Netflix’s mobile-only subscription plan in driving subscriber growth and enhancing the company’s revenue potential.

Mahaney noted that the mobile-only plan, introduced over the past couple of years, has been instrumental in attracting many new subscribers. With its more affordable price point, the mobile-only offering has resonated particularly well with consumers seeking flexible and accessible access to Netflix’s vast library of content.

The success of the mobile-only strategy goes beyond merely adding new subscribers; it also serves as a catalyst for expanding Netflix’s customer base across diverse demographics. Notably, Mahaney pointed out that approximately 40% of new sign-ups opt for the mobile-centric subscription, highlighting the effectiveness of the lower price tier in broadening Netflix’s market reach.

Furthermore, Mahaney underscored how the mobile-only plan provides Netflix a competitive edge, allowing the company to maintain pricing power even as it explores higher-end subscription options. By offering a more affordable entry point, Netflix can effectively capture market share and solidify its position as a leader in the streaming space.

Despite increasing competition and valuation concerns, Mahaney remains bullish on Netflix’s long-term prospects. He views Netflix as a standout performer amidst a backdrop of industry upheaval, with the company demonstrating resilience and adaptability in navigating evolving market dynamics.

In conclusion, Evercore ISI’s decision to raise Netflix’s price target reflects a positive outlook on the company’s future growth potential. With a focus on innovation and customer-centric strategies such as the mobile-only subscription plan, Netflix continues to differentiate itself in a crowded streaming market, positioning itself for sustained success in the years ahead.

Musk revealed that X is set to release an app that will enable users to watch long-form videos from the platform directly on their smart TVs. This strategic move follows a report by Fortune detailing X’s plans to roll out a TV app for Amazon and Samsung users in the coming week. The app, described as “identical” to YouTube’s TV app, signals Musk’s intention to position X as a direct competitor to the Google-owned video platform.

The announcement follows X’s efforts to revamp its video and audio offerings, which were introduced in October as part of Musk’s vision to make X a “super app” catering to various user needs.

Responding to a user’s post about the upcoming smart TV app, Musk teased the imminent release with a cryptic “Coming soon” message on X. He also highlighted that users can already stream X videos to their TVs using Apple AirPlay.

In a bid to attract content creators and advertisers, X has been actively seeking partnerships and rolling out new features. The platform has struggled to retain advertisers in the wake of controversies since Musk’s ownership group acquired X in 2022.

Last month, X announced plans to allow advertisers to target their ads alongside posts from select premium content creators. This move aims to boost ad revenue and attract high-quality content to the platform.

Despite X’s efforts to bolster its video offerings, the platform continues to face challenges in the highly competitive digital landscape. However, Musk’s ambitious vision and relentless pursuit of innovation suggest that X may yet emerge as a formidable player in the social media and video streaming markets.

As X prepares to launch its smart TV app and expand its presence in the video streaming space, all eyes will be on Musk and his team to see if they can disrupt the status quo and carve out a niche in an industry dominated by giants like YouTube.

One recurring theme in this conversation is the concept of bundling. Whether it’s the traditional cable bundle or a new amalgamation of streaming services, bundling offers both opportunities and challenges for market players.

As industry experts point out, some bundles are more interesting than others. Verizon’s partnership with streaming giants like Netflix and HBO Max offers a glimpse into the future of bundled services. By combining broadband with a suite of streaming options, these companies are creating a more enticing proposition for consumers.

But bundling isn’t just about offering a collection of services at a discounted price. It’s also about simplifying the user experience and reducing the complexity of managing multiple subscriptions. As the number of streaming options continues to grow, consumers are increasingly overwhelmed by choice. Bundling provides a solution to this problem by offering a one-stop shop for all their entertainment needs.

The rise of bundling is closely linked to the emergence of the “Ad Tier” – a new pricing strategy that aims to make streaming services more affordable for consumers. Companies like Canal+ are tapping into a growing demand for bundled services by offering discounted packages that include multiple streaming platforms.

However, the success of bundling depends on more than just price. It also requires a deep understanding of consumer behavior and preferences. Research has shown that consumers are willing to pay more for a smaller bundle of TV networks if it includes only the channels they watch.

In this new era of streaming, the key to success lies in finding the right balance between content, price, and convenience. Companies that can offer compelling bundles that meet the diverse needs of today’s consumers will emerge as the winners in the streaming wars.

As the battle for subscribers rages on, one thing is clear: the future of streaming is bundled. And for companies that can navigate this landscape effectively, the rewards are boundless.

Harley Finkelstein, COO of Shopify, discusses how COVID has dramatically sped up the timeline for commerce moving online and has also moved Shopify closer to its goal of becoming the world’s first retail operating system:

Shopify Evolving Into World’s First Retail Operating System

Most people assume that Shopify is an ecommerce provider. We have more than a million stores on Shopify. If you were to aggregate our stores in the US we’d be the second-largest online retailer in America. Of course, we’re not a retailer but we’re a platform. But we now have these great economies of scale that we’re using to level the playing field for entrepreneurs and small businesses. That being said, what really Shopify is evolving into is the world’s first retail operating system. 

What we’re trying to figure out is what do brands and entrepreneurs and retailers need, not just now but in the future? We think the future of retail is retail everywhere. A brand that’s going to be successful in 5, 10 or 15 years from now needs to sell across any platform and across any channel where they have customers. This idea of enabling Shopify merchants to very easily push their products to the Amazon Marketplace or the eBay marketplace or now the Walmart marketplace, that gives them access to a new set of consumers. The idea is that it all feeds back in one centralized back-office, the retail operating system, which is Shopify. 

Then we’ve gone ahead and asked what else can we do for these merchants? Can we do capital? We’ve now given out about a billion dollars worth of cash advances and loans to small businesses. We’re doing fulfillment and we’re doing shipping. We’re increasing the scope and the relationship that we have with the million stores on Shopify. This is allowing them to become category leaders.

COVID Speeds Up The Ecommerce Revolution

From our view, it seems like the commerce world that would have existed in the year 2030 has really been pulled into the year 2020 (as a result of the COVID crisis). We’ve seen ecommerce as a percent of total retail go from 15 percent to 25 percent in the last three months. That’s the same growth rate that we’ve seen over the last 10 years. What really has emerged here is sort of this tale of two retail worlds. On one side you have these resilient retailers that are doing great, they’re pivoting, and they’re expanding their businesses. On the other side, you have these resistant retailers who have not made it. In many ways, it’s probably the most exciting time for retail in a very long time. 

We talk a lot about these direct to consumer brands that are becoming category leaders. The Allbirds and the Gymsharks who started on Shopify when they were very small and have grown to become the incumbents in their industry. Every 25 seconds a brand new entrepreneur makes his or her (products) for sale on Shopify. We talk a lot about those new startups, those new DTC brands. But actually, what we’re also seeing on Shopify are companies like Lindt Chocolate or Heinz ketchup or Chipotle. They are signing up for Shopify and basically from like five days from contract to launch they are completely changing their businesses. 

This resiliency isn’t simply in the hands of just the smallest of brands. Big companies are also beginning to think a lot more about how to stay resilient in this time. They’re moving well beyond ecommerce or thinking about offline commerce now. They’re thinking about how do they sell across social media? How do they sell across different marketplaces? So no, I don’t think it’s too late (to enter ecommerce) but I do think they have to rethink their strategies.

According to Ars Technica, Alphabet’s executives announced the news in the company’s earnings call in late January. YouTube has been working to monetize its user base, even going so far as to crack down on ad-blockers to push people toward its Premium subscription.

At $13.99 a month, or $10.99 for just YouTube Music Premium, 100 million subscribers means the platform is becoming a significant part of Alphabet’s revenue.