The Walt Disney Corporationofficially announced Disney+, its direct-to-consumer streaming service, during its Investor Day webcast last week. The new over-the-top (OTT) service will become available on Nov. 12 for a US$6.99 month subscription. Disney+ willarrive with more than 25 new TV programs, as well as more than 10 newmovies.
The service will expand to include more than 400 movies fromthe Disney vaults, as well as other intellectual properties from Pixar, Marvel,Lucasfilm, National Geographic, and 20th Century Fox — all now ownedby the Mouse House.
Disney+ will be available via smart TVs, Web browsers, mobile devices, gameconsoles, and assorted set-top boxes. Disney already has secured a distribution deal with Roku.
Original and Exclusive Programming
What makes Disney+ notable is that out of the gate itwill be the only place in town to see the still to be releasedAvengers: Endgame, Toy Story 4 and Star Wars: Episode IX – The Rise of Skywalker when these films hit the streaming market. That is typically well before the paid-TV channels but often coincides with other home videoon DVD/Blu-ray.
Disney+ will follow the established OTT playbook that waswritten by Netflix, Amazon and Hulu — and which Apple seems about tofollow with its own streaming service — by including totallyoriginal content. In this case, it will be the only choice for seeingthe first live-action Star Wars universe TV series, The Mandalorian.
The eight-episode series will highlight the exploits of a bountyhunter who looks and seems to act much like fan favorite Boba Fett.As the series is set after the events of Return of the Jedi, it appearsto be an “original character,” but given that Mr. Fett apparently was aclone, we can only speculate on what that means. Regardless of thecharacter’s origin, The Mandalorian could be enough to build galactic-size interest in the series.
To ensure that hardcore fans don’t subscribe and then make a jump tolightspeed-style exit, other content from that galaxy far, far away isalso in the development stages. One such project is the still untitledCassian Andor series that feature Diego Luna reprising his rolefrom the standalone film Rogue One: A Star Wars Story. Billed as asci-fi spy thriller, its release is expected within two yearsof the launch, ensuring that fans stay a while.
A Marvel Universe and More
In addition to classic Disney content, something that could appeal tokids as well as nostalgic parents, this OTT service will be herocentral — and potentially the only game in town for exclusive Marvelcontent, including shows featuring fan favorites who typically don’tget as much screen time as the A-level players.
The Falcon and The Winter Soldier will be jumping into action within the first year of the service’s launch. Tom Hiddleston hassigned on to reprise his role of Loki in an original series, as haveElizabeth Olsen and Paul Bettany for WandaVision< focusing on theadventures of Wanda Maximoff and The Vision.
Besides the B-team characters from the Marvel Universe, Disney+ will offer an animated Monsters at Work series based on the hit moviefranchise.
Disney also will offer on-demand content from itsincreasingly vast library of movies and TV shows, of course — and the company hassaid that by the end of year one, Disney+ will offer more than 7,500 episodesof classic TV shows and more than 500 movies.
The Value of Disney
By the time it launched its streaming business a dozen years ago, following years of operating as a DVD-by-mail rental service, Netflix had become akin to a”great online library” for films and TV content. Now, with greater competition in the OTT space, none of the services can claim to have a “complete” library.
Even before Disney acquired LucasArts in 2012, its value to Netflixcouldn’t be understated. Taking away that content will leave a big gap.
“Netflix was the easiest way to give Disney content the onlinepresence it deserved,” said Michael Greeson, president of TDG.
“Netflix was a distributor — an important one — and this relationshipwould look much like those previously reserved for pay-TV networks,”he told TechNewsWorld.
“At that time, investors were questioning whether Netflix had legsbeyond 25 million U.S. subscribers, so the Disney partnership was awelcome relief,” Greeson added.
Flash forward to 2017, and after five years of mutually acknowledgedsuccess, Disney announced that it would terminate its relationshipwith Netflix at the end of 2019.
“As we predicted in 2011, Disney and other studios have evolved tounderstand the power of IP and thus bypass aggregators and selldirectly to consumers,” said Greeson.
Disney+ thus could be further diminishing Netflix, not to mention itsrival, Amazon Prime Video.
“Ultimately, as services move toward exclusivity, I see the number offuture deals for Netflix and Amazon dwindling,” said Erik Brannon,associate director at IHS Markit Technology.
“That’s why they’re positioning themselves as providers of significantamounts of original content,” he told TechNewsWorld.
“That original content is their nod to the fact that the world ischanging, and that there won’t be the same access to licensed contentthat there once was,” Brannon added.
This truly could upset the status quo in the OTT world.
“To date, the other providers have been prioritizing licensing dealsdeveloping the original content,” suggested Dan Cryan, principalanalyst at MTM in London.
As a result, Amazon and Netflix may need to become even more reliant ongenuinely original content, either developed by them, or as part of aninternational co-production, Cryan told TechNewsWorld.
“The libraries have been swinging towards this exclusivity for sometime,” he added.
Netflix is losing key content, but it has had time to prepare for thiseventual separation.
“Netflix anticipated this reality five years ago, amping upinvestments in originals to prepare for this day,” noted TDG’s Greeson, “and it is well prepared, with a vast arsenal of originals, incomparable reach, and a super-strong brand.”
The Walt Disney Company isn’t alone in creating a streaming servicewith its own exclusive content. CBS All Access, which launched in 2014to deliver sports and catalog programming from the Eyeball Network,already offers exclusive content not available via the traditionalbroadcast.
Disney’s move takes it even further by including a truly deepcatalog but with even more exclusive programming.
“It certainly creates an even more competitive environment in theexisting battle for eyeballs, as well as a richer content choice forviewers who now have, as [Walt Disney CEO] Bob Iger himself has stated, the ultimatepower over media firms with their viewing choices,” said Bea Alonso,director of global product marketing at Ooyala.
“As new streaming players introduce more content choices, the Netflixesand Amazons of this world will certainly need to step up their game tocreate highly competitive — better quality, less repetitive — content,or provide flexible and financially enticing offers,” she toldTechNewsWorld.
If Disney+ is a success, it would seem logical that NBCUniversal might follow suit.
“You’ve got the Disney-type companies of the world going direct in tothe consumer, but they are prepared to take the necessary steps tobring the crown jewels to their own service,” suggested MTM’s Cryan.
“There are major content owners that haven’t been as willing to go all in, but the reality is that if you’re going to grow your own direct-to-consumer business, you have to have the content,” he explained. “This means large volumes of exclusive content — beyond the films in the vault — so that people keep paying month to month.”
The large players, from the broadcast network to the cable channels tothe OTT services, already have accepted that the future will meansmaller “niche” audiences. The question is whether all theseservices can survive with limited content.
That is, if every content producer — as in the studios — becomes acontent provider, then it could diminish the value of the services.
“When Netflix was younger and there wasn’t the same confidence thatstreaming would be the powerful platform that it has become now,companies were quick to license to Netflix for the ‘extra income,'”said IHS’ Brannon.
Now that cord-cutting is a reality and streaming has gone mainstream,everyone is making their own OTT play.
“When any industry matures, there is a point when competitors learn howto maximize profits,” Brannon observed. “We’re at a point like that withstreaming — hence so many competitive services offering exclusivecontent — and the net effect will be a reduced monthly expenditure toend consumers, but it won’t be as significant as we had hoped.”
One question that is asked each time there is a new OTT service is,”when have we reached saturation?” Can the market really support Amazon,Apple, CBS All Access, Disney+, Hulu, Netflix and the dozen or sosmaller, truly niche players?
“No doubt subscription fatigue is becoming an issue, but it remains tobe seen just how many subscription streaming services are sufficient, and that’s what matters,” said Greeson.
Even with these services costing only $6 to $13 a month,that number can add up quickly. If there is value, consumers will pay,but there are only so many hours in the day to binge on the latestmust-see show.
“There will be a need to subscribe to multiple services, but by thetime consumers get access to the content they want, they could bespending nearly as much for streaming as they did for traditional payTV,” warned Brannon.
Further, “consumers face an oversupply of content, not only fromthe large content creators and distributors, but also from socialmedia and streaming gaming platforms like Twitch,” said Alonso.
“Subscription platforms will need to think carefully about the bundlesand pricing they offer to maintain viewership, but indeed today’saudiences are likely to favor providers that allow flexibility to tapin and out of different services and bundles,” she added.
Good content also will drive consumer choices, but the key word is “good.”
“This is a cyclical phenomenon — part and parcel of the TV industry:from a few networks offering a wide range of content, tomultiplication of choices and services, just to return to consolidation,” suggested Alonso.
“We are seeing a similar process in the streaming video landscape with increased fragmentation,” she said, “with the impending launch of Disney+ and eventually Apple TV Plus, which will inevitably end up in consolidation again.”
Back to Bundles
The consolidation could allow consumers to bundle their OTT services.The Mouse House also owns 80 percent of ESPN and has a stake in Hulu,so a partnership is possible — just as Amazon Prime Video offers HBOas a paid, standalone channel for Amazon Prime members.
“We are seeing the beginnings of this in Europe with large contentcreators joining forces to offer joint OTT services, so they cancompete with the streaming giants in terms of quantity, quality andcost,” said Alonso.
This could lead to a “spotifyzation” of video content, and consumerscould pick and choose what they want to watch, she suggested.
This might not be limited to video. Amazon Video is a service for those who pay for the free shipping via Amazon Prime, for example — but it could extend in other ways.
“Apple could introduce a ‘plus’ that included music and other mediaservices; so a video product could become part of this, much like theway cable services offer cable plus broadband,” said Cryan.
It’s unclear how OTT services will change consumption.Just as the DVR created time-shifting, OTT has enabled location shiftingto become a reality.
“With the promise of 5G, it may be possible to get better and fasterbandwidth at home, and certainly revolutionize content consumption outof the house,” said Alonso.
However, this could come at a cost. Over-the-air broadcast, cable andsatellite really don’t have bandwidth caps, so if all content goesstreaming — especially as UHD/4K is adopted — this could be anotherdiscussion.
“The price for broadband is on the rise, and ISPs are smart about datacaps and pricing,” noted Brannon.
“The 1TB data cap from Comcast is a great example. It sets people upfor overage charges if they do significant amounts of streaming inthe home,” he pointed out. “In the next few years, consumers will becomeaware of the problems — and then the cycle of angst will play itself out again.”