Disney Breaks Netflix's Heart

Disney Breaks Netflix's Heart


In a significant move, Disney announced this week that it will create its own direct-to-consumer video streaming services. It will launch a multisport, ESPN-branded online platform in early 2018, followed by a Disney service in 2019. In doing so, the company will end its partnership with Netflix that year.

Disney is targeting younger generations of video subscribers, who have been straying from traditional linear TV broadcast services such as cable, preferring the convenience of Internet-based alternatives like those from Amazon and Netflix. The company already runs an on-demand subscription video service for Disney movies called DisneyLife, which launched in the UK in 2015. This was widely regarded as a warm-up lap for offering a more expansive package of streaming content. Subscribers of traditional broadcast programming make the shift to streaming services during the coming decade, Disney saw this as the time for independence. As CEO Bob Iger commented, its new platforms will offer "much greater control over our own destiny in a rapidly changing market." Streaming is no longer a niche, but the company has been cautious to avoid eating away at its existing core revenue streams.

Disney has a wide portfolio of content. In addition to its venerable cast of characters, it also owns US TV station ABC, A+E Networks, sports broadcaster ESPN, Lucasfilm, Marvel, The Muppets Studio and Pixar, among other assets. Disney also has a 30 percent stake in Hulu.

Disney's new ESPN streaming service will be a solid test for the company. Sporting events have attracted customers willing to change access methods to get appealing content. With the new platform, Disney will offer 10,000 live regional, national, and international games and events per year including Major League Baseball, National Hockey League, Major League Soccer, Grand Slam tennis and college sports.

The Disney-branded service, which will start in 2019, will become the exclusive home in the US for movies from Disney and Pixar. This will include content such as Toy Story 4, the sequel to Frozen, and a live-action version of The Lion King, along with other highly anticipated movies.

Its new online platforms will use technology provided by video-streaming firm BAMTech, in which it took a minority stake in 2016. Disney also announced this week that it would pay $1.58 billion for an additional 42 percent stake in the company.

Not even a media giant like Disney is immune to the trend of cord-cutting and the company couldn't ignore the opportunity to distribute its wealth of franchises and content to new audiences online. Video is proving to be a battleground for providers as the likes of Amazon, Facebook and others have recently made announcements in this area. We believe that the move to Internet delivery of TV programming will see a return to large bundles of content (see CCS Insight Predictions for 2017 and Beyond).

Imitation is the sincerest form of flattery and the move by Disney is certainly a huge compliment to the success of Netflix and a strong validation of its strategy. Removing Disney content will pose a setback for Netflix. We expect other content and media owners to follow Disney in pulling their programming from the streaming site in a bid to differentiate their own offerings. This places greater importance on Netflix's investment in original content and puts into context its recent acquisition of comic book publisher Millarworld.

There are many streaming services available to subscribers and none are mutually exclusive. This is not a zero-sum game, and rivals can coexist. Nonetheless, budgets and leisure time are limited. Disney has attractive content, but it will have to ensure it offers the experience and pricing to match Netflix. Disney will need to recognise it's a challenger now, a strange position for a 95-year-old company.

This entry was posted on August 10th, 2017 and is filed under Devices. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Posted By Raghu Gopal On August 10th, 2017


Comments
(There are no comments yet)
Leave a Comment

Hot News

Team Tweets

CCS Insight
Nokia 8 from @HMDGlobal packs some clever features into a nice design. But will they be enough?… https://t.co/D9yqF6bNUT
Follow CCS Insight
Shaun Collins
No login req'd! @CCSInsight analysis of the launch of the @nokiamobile 8. Nokia now back in the high tier.… https://t.co/fljj61y1wT
Follow Shaun
Ben Wood
Fancy being part of a documentary where you swap homes, budgets and lifestyles? Here is your chance... https://t.co/4YNl6XSPVt
Follow Ben
Martin Garner
@Qualcomm acquires AI startup @ScyferNL - will boost its cred in AI. https://t.co/i66rE18uGY. Positioning itself fo… https://t.co/NUbgS8nhOk
Follow Martin
Geoff Blaber
Amazon doubling down on developer momentum with Alexa Voice Service Device SDK. Google has much catching up to do https://t.co/4zXq4G6v5V
Follow Geoff
Marina Koytcheva
@nationalrailenq You think you are excused for the inconvenience? Is the signaling system ever going to get fixed??? https://t.co/wRlCbQZPuN
Follow Marina
Nicholas McQuire
Top move> #Box to integrate #GoogleCloud Vision image recognition API for image-based workflows #MachineLearning #AI https://t.co/tcDYRKfC3F
Follow Nicholas
Paolo Pescatore
Check out these cracking mobile plans from Plusnet. Must be among the lowest in the UK https://t.co/3fwlzaJzeu
Follow Paolo
Kester Mann
RT @shauncollins: Nokia launches the 8. It's flagship device with @ZEISSLenses, Dual Sight and Ozo Audio. Lovely device but will need posit…
Follow Kester
George Jijiashvili
RT @richardlai: This is pretty crazy: @Insta360's next camera may shoot orbiting video while stationary https://t.co/POgGXBp0yH https://t.c…
Follow George
Katie Taylor
RT @Medgadget: Data Mined Insurance Records Point to Interesting Disease Relationships | https://t.co/FP3BHTRAnS
Follow Katie
Tony Worthington
Evolution: Microtel, Mercury One-2-One, Orange, TMobile, EE, BT. Have I missed anything out?
Follow Tony

Recent Blog Posts

Blog Post
Nokia 8 Enters the High-End Fray New Nokia-Branded Smartphone Marks Milestone for HMD Global ... Read more
Blog Post
Zap&Go Your Device New Method Enables Battery Charging in Seconds It feels i... Read more
Blog Post
Banking on a New Direction The Rise of the Mobile Financial Services Provider If you... Read more
More blog

Latest Company News

Blog Post
Halcyon Days Ahead for Indian Telecom Market CCS Insight Predicts Consolidation in India to Just Four Mob... Read more
More news