Disney announces details of its new video service – the streaming wars begin!

Disney announces details of its new video service – the streaming wars begin!
Disney has just thrown down the gauntlet in the streaming wars as it has announced details of its new streaming video service – Disney+. Will the entertainment giant give Netflix and other SVOD players a run for their money?

After months of anticipation, Disney has finally announced significant details about its new video streaming service. Called Disney+, the subscription plan will cost $6.99 per month or $69.99 per year. The service will be launched on the 12th November and will allow viewers to watch 4K content without ads. Wall Street has already given a thumbs up to the move as Disney shares rose 11.5% following the announcement.
In addition to content from Disney Studios, the service will contain content from Pixar, Marvel Studios, National Geographic and Lucasfilm, along with original content. The service is being positioned as a premium streaming option for families and kids. Disney already offers sports content via ESPN+ and general entertainment via Hulu. The development is consistent with Disney CEO Bob Iger’s assertion last year that Disney will not go in for a giant, aggregated play.

The roadmap for Disney+

From a price to value standpoint, Disney absolutely hits the sweet spot. At just $6.99 per month, it is significantly cheaper than other SVOD services. Netflix, which raised prices earlier this year, now charges $12.99 for its most popular plan with its standard plan costing $8.99.
Apart from an extensive library of content built over the years, Disney+ will also focus on original content, just like arch rival Netflix. Original content is being heralded as the next big differentiator for streaming services and is one of the core reasons for Netflix’s soaring popularity in recent years. While Disney’s existing catalogue means that it does not need to spend the $8 billion that Netflix spends on original content, it has earmarked a little over $1 billion for its original shows and movies until 2020. This spending on original content is expected to go up to the mid-$2 billion range in the next five years. 
Iger has predicted that the service will acquire 60 to 90 million subscribers by 2024, with two-thirds of customers outside the US. However, the service isn’t expected to become profitable until 2024, something which should not be too hard to stomach for Disney shareholders considering the company’s deep pockets.
Nevertheless, it is worth noting that the service will also cannibalise some of Disney’s existing revenue streams. Disney earns a lot of money from licensing its content to other streaming players such as Netflix. By pulling its content from third-party streaming sites, Disney will stand to lose significant revenue. In addition, it will also cut into its on-demand content and DVD sales.

The fight with Netflix and other SVOD players

Ever since Disney’s announcement about the streaming service in 2017, analysts have been building up the fight between Netflix and ‘Disneyflix’. While there is indeed competition, Disney+ is targeting a different demographic compared with Netflix. Disney’s new subscription service is aimed at families, whereas Netflix has something for everyone, including a ton of regional language content. Netflix is the clear winner in terms of the breadth of content available, whereas Disney may score in terms of the mass appeal of its titles.
That being said, Disney will take some time to build up its own streaming service and catch up with the likes of Netflix. Disney has to take care of a lot of other business verticals, in addition to its new streaming service, whereas Netflix has just one focus. In fact, Netflix has already reached the next level of content programming through experiments such as interactive content.
The same goes for other streaming services as well. For example, Amazon Prime Video has an enviable library and is increasingly popular since it is bundled with Amazon Prime. Disney will also have to contend with local players such as India’s Hotstar and Australia’s Kayo if it is harbouring global ambitions. And of course, streaming wars have become even more interesting with the entry of deep-pocketed technology giants such as Apple and YouTube (Google) into the mix.

The road ahead

Disney has a huge amount of experience generating content, and it is second to none in that space. But it will have to build up its technology platform and subscription experience if it is to emerge as one of the winners in the SVOD market. Part of Netflix’s dominance can be attributed to its superior technology and seamless subscription billing experience. Disney+ will have to at least match these if it wants to compete with Netflix and other players on a level playing field.
Despite the onset of subscription fatigue, Disney has a chance of succeeding thanks to the broad appeal of its content. The video streaming industry is not a ‘winner takes all’ race and there is ample room for multiple players to exist and be profitable. The question is – can Disney+ be among the winners?