Disney+ Works to Retain Customers After Verizon Free Trial Ends

Disney+ Approaches its One Year Anniversary

Walt Disney Co.’s (DIS) streaming service Disney+, which launched in November of 2019, will face an important test next month. When Disney rolled out the platform, the company partnered with Verizon Communications (VZ) and gave all Verizon customers a free year-long Disney+ trial.

Starting on November 12 of this year, customers who received free access to Disney+ through their Verizon service will have three choices: they can pay $7 per month to keep their Disney+ membership, they can switch to a wireless plan that costs $80 or $90 per month and includes Disney+, ESPN+, and Hulu, or they can unsubscribe from Disney+. Disney, Verizon, and competitors are eager to see how customers respond.

A Win-Win Partnership

Both Disney and Verizon have benefited from the Disney+ partnership over the past year. Disney reported that about 20% of Disney+ customers joined the service through the Verizon deal during the first two months that Disney+ was available. This is equivalent to about 5.3 million customers. For context, the service added about 26 million subscribers during its first two months and then hit 60.5 million subscribers after nine months.

For Verizon, collaborating with Disney has been a helpful way to encourage customers to upgrade to its $80 per month unlimited data plan. As of June, Verizon reported that over 50% of its customers had unlimited data plans. This number was boosted by people wanting to watch Disney+ content using data.

Looking Ahead

As Disney+ approaches its one-year anniversary, the streaming platform has much to celebrate. Disney+ reached its original five-year subscription goal of 60 million customers in just nine months. As many of Disney’s other businesses such as theme parks and cruises have been battered by the COVID-19 pandemic, Disney+ has been a bright spot for the company.

Disney and Verizon are doing everything they can to retain Disney+ subscribers after the free trial expires on November 12. Currently, customers who are still in the free trial period can add ESPN+ and Hulu for just $6 per month. Disney+ is also launching new content, like The Mandalorian, a Star Wars TV series. The Mandalorian starts on October 30 and new episodes will come out each week, so customers will need to extend their subscriptions past November 12 to watch the full season.

A recent survey of Verizon and Disney+ customers showed that 44% of people plan to renew their subscriptions and 37% are undecided. Over the next three weeks, Verizon and Disney will be eager to see if they can find ways to retain those undecided customers and add new customers.

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Care.com Sees Rapid Growth Following Acquisition by IAC

The Family Care Industry

In December of 2019, IAC/InterActive Corp. (IAC), the media and internet holding company, acquired Care.com, a platform that connects families to child care, senior care, and other resources. At the time of the purchase, the family care industry in the US was worth about $300 billion. Now, due to the pandemic, the sector is even larger.

Since IAC purchased Care.com, the company has seen demand for its services grow by triple-digit percentages. In comparison, the platform’s user base only grew by 3% between the third quarter of 2018 and the third quarter of 2019.

IAC’s Past Successes With Growing Tech Platforms

IAC has seen success developing a number of large online platforms. The holding company incubated Expedia (EXPE), Ticketmaster, and Match Group (MTCH), which owns and operates Tinder, Hinge, and other online dating services.

Last year, IAC announced that it would acquire Care.com for $500 million just a day after it shared plans to spin off its Match Group business. So far, this decision seems to have paid off.

IAC’s Initiatives at Care.com

The pandemic has led Care.com’s user base to expand for a number of reasons. Parents are looking for babysitters and tutors to help them balance working from home and helping their children with remote learning. Families are also seeking in-house care for elderly people as some are avoiding senior-care facilities because of worries about COVID-19.

IAC has also brought in new leadership for Care.com. For example, IAC hired a new head of safety who previously worked on screening and security at Uber. Care.com is also offering free childcare on election day this year at locations across 11 states. IAC hopes the changes it is making to Care.com will help the platform stay popular even when families are able to return to more normal routines.

Friday Fundings: McAfee, Rokt, and Yuanfudao

McAfee Returns to Wall Street

McAfee, a cybersecurity company, re-joined the stock exchange yesterday. McAfee was a public company until it was acquired by Intel (INTC) in 2011 for $7.7 billion. Intel then sold a majority stake in McAfee to private equity company TPG. On Wednesday, the company raised $740 million after selling 37 million Class A shares at $20 each. On its first day of trading, shares hit a high of $19.50, below its $20 IPO price. Shares ultimately ended the day at $18.70.

Despite a difficult first day, McAfee is coming back to Wall Street at a time when demand for cybersecurity solutions is surging. As people continue to work, shop, and socialize online as a result of the pandemic, software to protect against viruses, identity theft, spyware, and other problems is more sought-after than ever. The Global X Cybersecurity ETF (BUG) climbed by about 35% this year. Investors will be curious to see if McAfee’s performance will improve after its first day back on the market.

Ecommerce Software Maker, Rokt Raises $80 Million

Rokt, an ecommerce marketing software company, secured $80 million in Series D funding led by TDM Growth Partners. The new capital boosts the company’s valuation by 42%, bringing it to $450 million.

Rokt provides tools that allow companies to cross-sell and up-sell based on a customer’s past purchases. For example, if a customer buys a printer, Rokt could offer them the opportunity to buy paper.

Demand for online shopping has surged during the COVID-19 pandemic. Between March and September of 2020, consumers in the US spent $466 billion through ecommerce—a 52% increase from the same period last year. The ecommerce boom has also made private equity firms and other investors eager to back companies like Rokt that create technology to support online shopping.

Yuanfudao Raises $2.2 Billion Amidst Remote Learning Boom

Yuanfudao, a Beijing-based education startup, raised $2.2 billion from Chinese and international investors. The new funding brings the company’s valuation to $15.5 billion. One funding round was led by Tencent (TCEHY) and another was led by DST Global.

Yuanfudao facilitates live video tutoring and homework help for students in China. The company was growing rapidly even before the pandemic, but its popularity has boomed due to the rise of remote learning this year. Over the past two years, the company has doubled its total users and currently serves about 400 million students in China. Yuanfudao plans to use the new funding to expand its offerings, develop its curriculum, and to incorporate more AI functionality into the platform.