Disney Goes Over the Top: How Does Its Streaming Service Stack Up? | Online Entertainment
The Walt Disney Corporation
officially 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+ will
arrive with more than 25 new TV programs, as well as more than 10 new
movies.
The service will expand to include more than 400 movies from
the Disney vaults, as well as other intellectual properties from Pixar, Marvel,
Lucasfilm, National Geographic, and 20th Century Fox — all now owned
by the Mouse House.
Disney+ will be available via smart TVs, Web browsers, mobile devices, game
consoles, 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 it
will be the only place in town to see the still to be released
Avengers: 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 video
on DVD/Blu-ray.
Disney+ will follow the established OTT playbook that was
written by Netflix, Amazon and Hulu — and which Apple seems about to
follow with its own streaming service — by including totally
original content. In this case, it will be the only choice for seeing
the first live-action Star Wars universe TV series, The Mandalorian.
The eight-episode series will highlight the exploits of a bounty
hunter 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 appears
to be an “original character,” but given that Mr. Fett apparently was a
clone, we can only speculate on what that means. Regardless of the
character’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 to
lightspeed-style exit, other content from that galaxy far, far away is
also in the development stages. One such project is the still untitled
Cassian Andor series that feature Diego Luna reprising his role
from the standalone film Rogue One: A Star Wars Story. Billed as a
sci-fi spy thriller, its release is expected within two years
of the launch, ensuring that fans stay a while.
A Marvel Universe and More
In addition to classic Disney content, something that could appeal to
kids as well as nostalgic parents, this OTT service will be hero
central — and potentially the only game in town for exclusive Marvel
content, including shows featuring fan favorites who typically don’t
get 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 has
signed on to reprise his role of Loki in an original series, as have
Elizabeth Olsen and Paul Bettany for WandaVision
Besides the B-team characters from the Marvel Universe, Disney+ will offer an animated Monsters at Work series based on the hit movie
franchise.
Disney also will offer on-demand content from its
increasingly vast library of movies and TV shows, of course — and the company has
said that by the end of year one, Disney+ will offer more than 7,500 episodes
of 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 Netflix
couldn’t be understated. Taking away that content will leave a big gap.
“Netflix was the easiest way to give Disney content the online
presence it deserved,” said Michael Gleeson, president of
TDG.
“Netflix was a distributor — an important one — and this relationship
would look much like those previously reserved for pay-TV networks,”
he told TechNewsWorld.
“At that time, investors were questioning whether Netflix had legs
beyond 25 million U.S. subscribers, so the Disney partnership was a
welcome relief,” Gleeson added.
Flash forward to 2017, and after five years of mutually acknowledged
success, Disney announced that it would terminate its relationship
with Netflix at the end of 2019.
“As we predicted in 2011, Disney and other studios have evolved to
understand the power of IP and thus bypass aggregators and sell
directly to consumers,” said Gleeson.
Exclusive Content
Disney+ thus could be further diminishing Netflix, not to mention its
rival, Amazon Prime Video.
“Ultimately, as services move toward exclusivity, I see the number of
future 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 significant
amounts of original content,” he told TechNewsWorld.
“That original content is their nod to the fact that the world is
changing, and that there won’t be the same access to licensed content
that 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 deals
developing the original content,” suggested Dan Cryan, principal
analyst at
MTM in London.
As a result, Amazon and Netflix may need to become even more reliant on
genuinely original content, either developed by them, or as part of an
international co-production, Cryan told TechNewsWorld.
“The libraries have been swinging towards this exclusivity for some
time,” he added.
Netflix is losing key content, but it has had time to prepare for this
eventual separation.
“Netflix anticipated this reality five years ago, amping up
investments in originals to prepare for this day,” noted TDG’s Gleeson, “and it is well prepared, with a vast arsenal of originals, incomparable reach, and a super-strong brand.”
More-Competitive Environment
The Walt Disney Company isn’t alone in creating a streaming service
with its own exclusive content. CBS All Access, which launched in 2014
to deliver sports and catalog programming from the Eyeball Network,
already offers exclusive content not available via the traditional
broadcast.
Disney’s move takes it even further by including a truly deep
catalog but with even more exclusive programming.
“It certainly creates an even more competitive environment in the
existing battle for eyeballs, as well as a richer content choice for
viewers who now have, as [Walt Disney CEO] Bob Iger himself has stated, the ultimate
power 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 Netflixes
and Amazons of this world will certainly need to step up their game to
create highly competitive — better quality, less repetitive — content,
or provide flexible and financially enticing offers,” she told
TechNewsWorld.
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 to
the consumer, but they are prepared to take the necessary steps to
bring 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.”
Content Play
The large players, from the broadcast network to the cable channels to
the OTT services, already have accepted that the future will mean
smaller “niche” audiences. The question is whether all these
services can survive with limited content.
That is, if every content producer — as in the studios — becomes a
content provider, then it could diminish the value of the services.
“When Netflix was younger and there wasn’t the same confidence that
streaming 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 how
to maximize profits,” Brannon observed. “We’re at a point like that with
streaming — hence so many competitive services offering exclusive
content — and the net effect will be a reduced monthly expenditure to
end consumers, but it won’t be as significant as we had hoped.”
Service Saturation
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 so
smaller, truly niche players?
“No doubt subscription fatigue is becoming an issue, but it remains to
be seen just how many subscription streaming services are sufficient, and that’s what matters,” said Gleeson.
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 latest
must-see show.
“There will be a need to subscribe to multiple services, but by the
time consumers get access to the content they want, they could be
spending nearly as much for streaming as they did for traditional pay
TV,” warned Brannon.
Further, “consumers face an oversupply of content, not only from
the large content creators and distributors, but also from social
media and streaming gaming platforms like Twitch,” said Alonso.
“Subscription platforms will need to think carefully about the bundles
and pricing they offer to maintain viewership, but indeed today’s
audiences are likely to favor providers that allow flexibility to tap
in 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, to
multiplication 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 HBO
as a paid, standalone channel for Amazon Prime members.
“We are seeing the beginnings of this in Europe with large content
creators joining forces to offer joint OTT services, so they can
compete with the streaming giants in terms of quantity, quality and
cost,” said Alonso.
This could lead to a “spotifyzation” of video content, and consumers
could 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 media
services; so a video product could become part of this, much like the
way cable services offer cable plus broadband,” said Cryan.
Bandwidth Burnout
It’s unclear how OTT services will change consumption.
Just as the DVR created time-shifting, OTT has enabled location shifting
to become a reality.
“With the promise of 5G, it may be possible to get better and faster
bandwidth at home, and certainly revolutionize content consumption out
of the house,” said Alonso.
However, this could come at a cost. Over-the-air broadcast, cable and
satellite really don’t have bandwidth caps, so if all content goes
streaming — especially as UHD/4K is adopted — this could be another
discussion.
“The price for broadband is on the rise, and ISPs are smart about data
caps and pricing,” noted Brannon.
“The 1TB data cap from Comcast is a great example. It sets people up
for overage charges if they do significant amounts of streaming in
the home,” he pointed out. “In the next few years, consumers will become
aware of the problems — and then the cycle of angst will play itself out again.”
Peter Suciu has been an ECT News Network reporter since 2012. His areas of focus include cybersecurity, mobile phones, displays, streaming media, pay TV and autonomous vehicles. He has written and edited for numerous publications and websites, including Newsweek, Wired and FoxNews.com.
Email Peter.