Does Disney+ compete with Netflix? Are you sure?

Entrepreneurs are always looking for a competitive advantage but it can be tough to find real examples of companies that do it well. Disney’s decision to enter the streaming video market is a decision every entrepreneur can learn from.

It’s a tried and true business rule that getting more business from existing customers is an easy way to increase your revenue (see Is your business grabbing #EasyMoney?). What other reasons would you want to increase your revenue from existing clients? I think entrepreneurs overlook the importance of their relationships with customers after the initial sale or interaction is complete. I think entrepreneurs spend more time looking for new customers than they do servicing and find new opportunities with existing clients. If the idea of adding incremental revenue to your business is something you haven’t spent a lot of time thinking about, maybe Disney’s latest move will give you a reason to reconsider.

Disney earns an enormous amount of income from it’s theme parks, merchandise and sports rights so why did it decide to enter the streaming space? To compete with Netflix and other streaming services? I don’t think so. There are a few different schools of thought out there but I believe that Disney’s decision has more to do with securing and protecting its brand with its customers than it has to do with generating incremental income. I think of it more like a loss leader that Disney is prepared to pay for because it gives them another opportunity to strengthen relationships with its base of customers that are generating revenue for them through other products and services. Said a different way, Netflix doesn’t have any other opportunities to generate revenue from their customer base unless they increase their pricing, which can only be raised so high. Netflix doesn’t have a portfolio of other products and services that it earns income from. A company like Disney earns all of its revenue from other sources. Therefore Disney is always looking for ways to maintain and strengthen its relationship with customers so it can protect and preserve existing revenue sources. Disney would do this even at a loss because the cost of the offering would be less expensive compared to losing revenue from its core products and services. A pretty smart strategy for protecting your income.

As entrepreneurs we always need to be aware of what our competitors are doing, or what they could be doing, to take our customers from us. To stay ahead of them we can follow Disney’s example by finding low cost opportunities that make it easy for us to maintain customer loyalty and protect our core business. It doesn’t take a lot of work but it does take some creativity to stay one step ahead of what customers want. If you are prepared to do to the work you’ll most likely be able to maintain and build your company’s brand loyalty and bottom line.