Disney is doing what Netflix hasn’t

How digital collectibles will unlock a new era of fandom and loyalty

Disney has not only a massive IP portfolio but also a huge, multi-faceted fandom universe that spans physical merch, parks, streaming, music, TV, film, cruises, hotels, Broadway shows, collectibles, licensed games, and more. It's a big mess of a consumer web to manage and even more challenging to harness its flywheel. Historically, Disney’s arms have been largely siloed, the main connective dots for the ecosystem reliant on passive fandom (e.g. if I love the Star Wars movies, I might be inclined to go to Disney World for the Star Wars park). Its silos have meant that activity and engagement in one arm of a consumer's Disney journey was only possibly of benefit to another arm. With some of its recent changes to Disney+, that is starting to change. More on this later.

Obviously, Netflix is a much younger company. It doesn’t have the same degree of bluechip IP that Disney has, and is nowhere near as expansive in its business units. It is, however, increasingly experimenting with strategies beyond streaming, including its somewhat weird gaming strategy, its Stranger Things Broadway show, its physical “Netflix Houses” locations, licensed merch, and so on. Which is to say that Netflix is increasingly copying the tried-and-true IP hub-and-spoke model of large media conglomerates like Disney.

Netflix has the advantages, however, of being a relatively smaller (14k to Disney’s 214k employees), more monied (~$9.5B cash on hand compared to $6B), and younger company than Disney with, possibly, less entrenched and less firewalled verticals. And yet it’s Disney, not Netflix, that is innovating in the area of digital loyalty to meaningfully connect its streaming and non-streaming businesses. The yearn for innovation may be due to Disney+’s third place standing (it’s 126M subscribers put it behind Amazon Prime Video and Netflix), but it also makes sense for a company that has spent the last century deeply understanding fandom in all of its facets to push the envelope in new categories. It stands to reason that Disney has a good grasp on what connecting consumers across different experiences can mean for its business.

Disney+ Perks and Collectibles

Disney+ just announced its “Always On” Perks, following a limited trial in 2023. The program offers a number of benefits to Disney+ users, showcased directly inside of the Disney+ smart TV app, with a big QR code on start-up that takes you to the Perks web platform. From there, users are presented with a list of initial benefits which just happen to have convenient direct or indirect tie-ins to Disney’s expansive business. Disney promises to drop new benefits frequently, keeping users engaged and wanting to see what else they can get. Here are a handful:

• Sweepstakes entries to win a 4-night stay on a Disney Cruise

• Discounts at Adidas, Funko, and Loungefly (all 3 of which sell Disney IP-licensed products)

• A 6-month trial to Doordash (so you don’t have the leave the house for food and can keep watching Disney+) and Clear (so you can have an easier time flying to Disney World)

• Discounts on stays at Disney World

It’s easy to see how each of these benefits does something to impact Disney’s bottom line, and embedding it natively into a platform like Disney+ (which is more likely to have daily engagement rather than, say, a once-a-decade trip to a Disney park) helps distribute these opportunities to audiences more regularly with the goal to bump their behaviors and spend (maybe I go to a park twice a decade now).

(In addition to helping power the consumer flywheel of Disney-branded stuff, a perks platform like this is a great bargaining chip in negotiating licensing deals with merchandisers or even earning new revenue streams (e.g. offering free or paid spots to promote offers to Disney+ subscribers).)

It’s clear that Disney intends to make Perks a key part of unifying its revenue opportunities and up-leveling its loyalty.

One more thing…

There is one nugget of a perk whose novelty may go unrecognized to the lay consumer: digital collectibles. Disney announced a partnership with web3 company Dapper Labs back in 2023. The initial collectibles of Disney Pinnacle—digital “pins” on the Flow blockchain—smacked of the same generic web3 experiments that consumer brands ran with NFTs in the 2021-2023 era. Which is to say that these were largely licensed goods akin to any other branded consumer product. Like slapping a Little Mermaid sticker on a lunchbox: Disney sells an IP license, someone else makes the stuff, Disney earns royalties, that’s it. Rimowa, Budweiser, Adidas and many others did the same. These NFTs weren’t core to anyone’s business, they were another thing to sell on the side. And their lack of integration with the brands’ day-to-day business resulted in some predictable but unfortunate situations.

As I wrote about in June 2023, several months before Dapper and Disney announced their digital collectibles partnership, there is a lot that a company like Disney can do with a single NFT across its businesses. While the first launch with Dapper didn’t look to be headed in this direction, integrating these collectibles into Disney+ is a nod to the idea that the company is recognizing the possibilities of digital goods beyond the side-show, especially when distributed and sold through digital-native destinations like streaming platforms.

The significance of this move is pretty substantial, but will probably go unnoticed to most consumers for the time being. Disney is the apex of family-friendly brands, which is anathema to web3. NFTs and crypto are scary terms that conjure thoughts of scams, high friction, and wasted money (to be fair: not that wrong historically). So for Disney to stake a claim and put blockchain-based assets as one of the flagship perks of its new program reaching 126M consumers is a bold move, and belies an underlying strategy where digital collectibles and on-chain data back a key component of Disney’s holistic consumer loyalty plans. Or that’s what should happen.

What should happen next: the connected Disney flywheel

The opportunity afforded to loyalty programs by blockchain technology is immense, especially for an organization as complex as Disney. On-chain items, accounts, and funds offer universal standards that span companies, countries, and platforms in a way that is more scalable and adaptable than traditional web2 technology. The blockchain lets, for example, the Disney parks unit to have a full understanding of and access to a fan’s digital profile and spending power without needing to do complex integrations of the Disney+ authentication system. The latter sounds trivial, but at companies as large and siloed as Disney, tech integrations across teams and entities is pretty hard. So hard, in fact, that until the launch of the unified MyDisney account last year, a single user’s accounts across Disney looked like this:

Streaming Platforms:

• Disney+

• Hulu

• ESPN+

Theme Parks and Resorts:

• Walt Disney World Resort

• Disneyland Resort

Retail and Shopping:

• Disney Store

Other Disney Experiences:

• Disney Cruise Line

• Adventures by Disney

• Aulani, A Disney Resort & Spa

The Disney Store could do nothing with the user data of visitors to the Aulani spa. Blockchain information rises above and can encompass any user account, meaning that each of these disparate logins could have been tied to a user’s single wallet address, for example, without the effort and money put into developing a new MyDisney login and getting company-wide integration and adoption.

Web3 also allows for easier collaborations with third parties. Disney isn’t going to give a third party retailer access to its Disney+ database, but it can let the retailer peer inside a user’s wallet connected to their Disney+ account and see everything they need to know, like what items the user owns that may offer them a 20% discount on the retailer’s ecommerce site, what brand affinities they have, therefore showcasing certain items to users. Likewise, third parties that partner with Disney, like the game publisher EA, which has its own login and account system, won’t want the friction of needing to integrate the MyDisney login just so users can connect their Star Wars collectible to the Star Wars EA game, but connecting a wallet takes one click.

So what should Disney do next? Disney’s next move should be its own wallet, tied to MyDisney. It is a natural progression of connecting the dots amongst its different business units and loyalty efforts. Users unlocking or buying digital items across Disney businesses or licensed IP products (like the Star Wars game, for example), can corral those assets under the comfy umbrella of their MyDisney account, with all the benefits across Disney+ Perks and other properties.

One can also imagine, in a more-distant future, a Disney stablecoin. As fans travel around the internet and the globe, enjoying Disney parks in Japan, Florida, Paris, buying merch from overseas, etc, having a global currency that works anywhere for anything would be the icing on a Disney digital ecosystem cake.

With consumer wallets in hand, in the meantime, Disney should start thinking about what on-chain assets do for incentivizing behaviors across the current Disney ecosystem. To offer a picture of what one of these existing Dapper Labs NFTs could mean for driving loyalty, engagement, and spending across all of Disney, here’s a verbatim outline of what I suggested for a Mandalorian NFT back in 2023:

A single Star Wars NFT has wildly varied use cases, and for an uber Star Wars fan like me, I'd want to engage in all of it:

• Marketing: The NFT is a dynamic, collectible ad for the upcoming Mandalorian season that changes with the airing of each episode 🗣

• Ecommerce: The item can redeem a physical collectible toy from the Mando website, which also teases more about the new season 🛒

• Retail: It gets the holder 15% off a single purchase at any Disney retail store, bringing foot traffic that otherwise wouldn't happen 🛍

• Parks: Skip to the front of the line for the Star Wars: Rise of the Resistance ride, an incentive to head down to Disney World and buy a parks pass 🏰

• Community: Opportunity to vote on a content decision for an episode, embedding me more deeply into the ecosystem and doubly ensuring I watch to see what unfolds 📹

• Gaming: The asset maps to a special in-game character in an EA Star Wars title, getting me to buy the game and reward Disney and its games licensee 🎮

• Streaming: A month off a premium Disney+ sub, getting me to upgrade my access 📺

While Disney+ Perks haven’t hinted at these kinds of digital collectibles use cases, it is undeniable that Disney is making a play for unified accounts and a coalescence of digital and physical products with an eye towards an innovative goal: the world’s largest media loyalty program spanning a complex constellation of digital and physical experiences. By having digital goods play a more central role in the loyalty program, Disney will have greater flexibility in how it rewards consumers, how perks intersect with partners, and how much information it garners about fan behaviors.

Remember that this is the same company that spent $1B to convert every hotel door lock at Disney World to be openable with a wristband. The goal was not to make it easier for guests to enter their rooms, but instead to have a unified tracking method for every action at the park as guests tap into different locations. Walt knows when you go to the park, when you eat, what you eat, what you ride, and when you get home for the night; all of that information is used to make Disney a bit more magical, and a lot more sellable. With this proclivity for comprehensive fan tracking, Disney’s moves with Disney+, Perks and MyDisney are very on-brand. I think we’re seeing just the beginning of how Disney will use these expansive loyalty programs and digital collectibles to further unlock its flywheel. The blockchain will help unify and accelerate the benefits of this program even more, and Disney should lean into its use.

What Netflix should be doing

As I said earlier, Netflix has a number of advantages over Disney that put it in a position to harness digital goods and connected loyalty faster. It already has a unified login (the Netflix account works across all of their games), is already a digital-native company, and has been keenly consumer-data-driven from the start. At the same time, Netflix is newer to nurturing IP and fandom for the long-haul, especially across multiple verticals. Netflix’s longest-running IP is Big Mouth, which was just renewed for its eighth and final season. By contrast, Disney-owned Fox renewed The Simpsons for its 37th and 38th seasons, and Mickey Mouse is so old he’s in the public domain. Disney is a company that inherently understands building fandom from cradle to coffin, from movies to a full network of global experiences, and it knows how to harness the loyalty of fandom to create new revenue streams in entirely different domains. Digital goods and digital loyalty allow Disney to do this more efficiently than ever before.

For years, Netflix’s business was very basic. All that mattered was subscribership. Now, however, Netflix is clearly trending in a similar direction to Disney with multi-faceted physical and digital experiences, and its surprising that they haven’t caught onto the power of digitally-connected business units. Digital collectibles and on-chain accounts can help Netflix leverage its new show/retail/merch/gaming spokes for new revenue streams. They can also unleash a more powerful web that helps it not merely maintain and grow subscriptions, but make more money through new methods, while keeping users trapped in its IP universe.

Netflix’s existing subscribership-only focus is a fine one, but it’s underoptimized, and offers no incentives for users to stay engaged in the Netflix world besides a relentless stream of content. Leveraging digital collectibles and on-chain accounts lets Netflix engage in a more IP-connected and cohesive content and loyalty strategy.

For example right now, as a subscriber, I get nothing from playing most Netflix games that would drive me back to the streaming platform, the Broadway show, the Netflix House, etc. (How is a wonky mobile port of 2004’s GTA San Andreas supposed to get me jazzed about the upcoming season of Stranger Things?) Disney, in contrast, has already used its properties to create a flywheel where IP is the connective tissue across different experiences and different ways of making money. And now digital assets can make it even more efficient.

I’m not saying that a tired-looking Epcot Mexico pavilion made Pixar create Coco [wink-wink], but I’m pretty sure Disney had increased ridership and park attendance in mind when it rebranded the Twilight-themed Tower of Terror to the more-recent Guardians of the Galaxy. The ride itself is identical to what it was before, all that changed is the affinity made to draw people to the park and part with their dollars. With its new rewards program, one can easily picture a special Guardians-skinned digital collectible that you unlock only by riding the new Tower or Terror which can be tradable, opening up a new revenue stream of secondary trading royalties for Disney. Or perhaps a pin that, if bought, gets you to the speed lane for the ride, incentivizing more people to buy a park pass.

Netflix can start to do this easily. Shouldn’t playing Squid Games’ Call of Duty collaboration grant me a special item that lets me watch season three a week early? Or my digital Stranger Things Broadway show ticket gives me a special item in the Stranger Things mobile game? Adding these kinds of simple ties between properties and collaborations creates a more powerful connected network to make my Netflix world more all-consuming and valuable. I haven’t spent a dime on additional content in Call of Duty, but if a Squid Games skin happened to have a dual benefit (I look fly in CoD and it gives me some no-cost benefit in Netflix) I’d be more likely to buy something—a revenue bump for Netflix and Activision—and feel special and more devoted to Netflix.

I applaud Disney’s move to not only recognize the benefits of its new unified accounts and digital loyalty platform, but also their willingness to take a bold move into exploring how digital assets can boost their fans’ experiences and the company’s economics. I believe that Netflix will get there, too, and that we’re seeing just the beginnings of what a new era of connected and interoperable fandom can do.