It's Disney's turn to launch a streaming service

[The AchieVer]

It's Disney's turn to launch a streaming service

 

 

Image copyrightDISNEY

Image captionDisney+ will be accessible through smart TVs as well as smartphones and tablets

Can an almost century-old company learn from its glorious past and create itself a brave new future? Coming to a small screen near you… eventually. 

 

Disney has finally announced its long-anticipated streaming service, but it won’t be available until November in North America - and in some markets, it will take much longer. 

 

That’s due to several factors, but mostly because Disney is still in the process of clawing back the rights to its content, sold to other streaming platforms before it had platform aspirations of its own. 

 

It will take as long as four years before all of the deals have expired, the firm said. The delay could hobble Disney’s chances to succeed in the streaming market, described by chief executive Bob Iger as his “biggest priority”. 

 

When it does eventually launch, however, Disney+ will be a streaming juggernaut. The service will bundle together some of the firm’s major franchises, including the work of Pixar, Marvel, National Geographic and Star Wars, for a monthly subscription price of $6.99, or $69.99 a year. 

 

And because the firm has had its chequebook out lately - spending $70bn on 20th Century Fox - Disney+ will also incorporate content from recently acquired companies, such as the first 30 seasons of The Simpsons. 

Image copyrightGETTY IMAGES

Image captionDisney+ will be the exclusive home of Star Wars films and other spin-off content

More widely, Disney also owns sports network ESPN, which now has more than 2 million paid digital subscribers, and India’s Hotstar - which enjoys 300m subscribers in a market predicted to continue to grow extremely quickly. Disney is also a majority owner in Hulu, the US streaming service that has plans to expand globally soon, the firm said. 

Straight to Disney+

These are all big moves that place Disney right at the heart of a crowded but increasingly lucrative streaming market - one where being distinct is vital. Netflix expects to spend $15bn on new content this year to achieve this aim. Apple, last month, launched its Apple TV+ service, with help of Oprah and friends who will be creating exclusive content. 

 

Disney’s strategy to reassure its investors, it seems, is to state that obvious: its been doing this for a very long time indeed. 

The launch of Disney+ took place in a fitting location that has seen plenty of transformation over the past few decades: Sound Stage 2, on the firm’s iconic, sprawling Los Angeles campus. Built in 1949, the studio was the space where the original Mary Poppins was filmed, as well as, decades later, Pirates of the Caribbean. Both heralded new technologies in filmmaking. 

 

But, Disney’s illustrious past could end up being a hindrance. It sold 900m movie tickets last year, bringing in more than $7bn in box office revenue. It can’t afford to lose the core of its business, and so it will keep its big name content off Disney+ until well after its traditional run-out in the cinema and home entertainment sales (as in, buying it on Blu-Ray, or downloading it). 

Disney+ subscribers will instead get additional content, mini-series based on characters in the new films, or behind the scenes footage. 

 

There will be straight-to-Disney+ films available when the service goes live, such as Christmas film Noelle, starring Anna Kendrick, and a remake of Lady and the Tramp. These films will be made with “all the care” of typical Disney movies, the company promised, but as with straight-to-video in years gone by, consumers will surely not see them as being in the same league. 

Over-subscribed?

Higher hopes will be pinned on exclusive series made for Disney+, such as The Mandalorian, a the first live-action Star Wars TV series - which will be on the service from launch. 

 

This is an expensive endeavour for Disney. It doesn’t expect Disney+ to turn a profit until 2023 at the earliest, and in the meantime it is losing out on revenue it was getting by selling on its content to other streaming providers - it was getting $150m from Netflix alone, according to reports. 

At $6.99 a month, Disney is laying down a huge challenge to Apple, which hasn't yet told customers how much its service will cost when it too launches later this year. 

Above all, though, the unanswered question remains: just how many subscription services can the public take? A generation of delighted “cord cutters”, who cancelled traditional TV subscriptions in favour of streaming, might soon start to wonder how much it might cost just to, you know, plug the cord back in.

 

 

 

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[steven36]

Disney used to make hundreds of millions from Netflix. Now it will spend billions to fight it.

 

The war for the streaming services is getting very expensive.

 

Disney used to make hundreds of millions of dollars a year selling its stuff to Netflix.

 

Now it is going to spend billions of dollars a year to try to beat Netflix.

 

Disney executives didn’t mention Netflix once during their three-hour-plus investor presentation Thursday, at which the company laid out its plans to build up a suite of subscription streaming services — most notably Disney+, a $7-a-month service bursting with movies and TV shows. Disney+ launches in the US in November and will feature everything from Disney’s recent theatrical offerings, like Captain Marvel, to classic Disney movies like Bambi, and new, original stuff like The Mandalorian, a Star Wars TV-show spinoff.

 

And Netflix isn’t the only company Disney will be battling in the years to come; the list of competitors and would-be rivals now includes everyone from Amazon to Apple to AT&T.

 

But make no mistake: Netflix is the primary reason Disney is making the giant leap from selling its stuff to distributors to launching its own streaming business, where it hopes to sell its stuff directly to tens of millions of consumers, via its own apps.

 As the Information reminded us this week, Disney — and just about every big media company — used to view Netflix as a great place to make easy money. Netflix desperately wanted to build up its own streaming business, and Disney and other big media companies were happy to take Netflix’s money.

 

In 2012, for instance, Disney struck a deal to sell its movies to Netflix for an estimated $300 million a year, instead of striking a deal with conventional distributors like HBO or Showtime.

 

And in 2015, even as Netflix was attracting tens of millions of customers to its ad-free, all-you-can-eat streaming, and while Disney’s cable channels were simultaneously losing millions of viewers, Iger still said he was happy to keep doing business with Netflix CEO Reed Hastings: “We look at Netflix as more friend than foe. They’ve become an aggressive customer of ours,” he told Wall Street.

 

Two years later, Iger had done an about-face: He said Disney would stop selling its stuff to Netflix and would launch its own service, which would stream everything from blockbuster titles like its Star Wars and Marvel movies (after they’d been in theaters) to original programming based on popular Disney characters and brands.

 

All of that is going to cost Disney real money: It has to to build up the technical resources it needs to run its own streaming service and create original programming for subscribers. And, of course, it is also giving up the hundreds of millions of dollars it used to make selling its stuff to Netflix and other distributors.

 

Disney is putting a positive spin on this: It says it will sign up 60 million to 90 million subscribers for Disney+ by the end of its 2024 fiscal year (with two-thirds of those subs coming from outside the US). It also projects up to 12 million subscribers for its ESPN+ service (which sells sports programming that isn’t carried on its regular ESPN cable networks) and up to 60 million Hulu subscribers.

 

But the bill for that will be in the billions. Disney’s three streaming operations will run a loss of $3.9 billion in the company’s 2019 fiscal year, estimates analyst Michael Nathanson. That number will jump to $4.9 billion the next year, with Disney+ accounting for $2.5 billion of that loss; Bernstein analyst Todd Juenger says those numbers will get worse if Disney decides to expand Hulu outside the US, since it will have to spend even more on content. Disney says it will start making money on its streaming businesses by 2024.

 

Context: Disney can afford to throw billions at this venture because it’s a giant that just got bigger by swallowing much of Rupert Murdoch’s 21st Century Fox. Disney generated $59 billion in revenue last year, and made more than $10 billion in profit. This year, as it adds Fox assets like The Simpsons (also coming to Disney’s streaming service), it is projected to make another $10 billion profit on $71 billion in revenue. By 2023, it should be a $100 billion company.

 

More context: While Disney is making a big strategy shift here, it is not blowing itself up. Disney’s core businesses — theme parks, movies, merchandise, and cable TV — are all staying intact, and the company expects it will stay as such for a long time. Notably, while the company is selling ESPN+ directly to hardcore sports fans, it is keeping its main sports product safely behind the pay TV wall: For now, at least, the only way to get ESPN is to subscribe to a bundle that includes dozens of other pay TV networks, too.

 

So what’s Netflix going to do about all this? Per Hastings, the same thing it has been doing for years: spend billions each year to build up its own content library, and hope to add to the 139 million subscribers it already has worldwide.

 

“You do your best job when you have great competitors,” Hastings said when asked about the coming competition from Disney and others last month. If you’re looking for an updated answer, check back Tuesday, when Netflix reports its newest earnings numbers.

 

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