In Disney’s latest earnings report, the focus was back on its upcoming video streaming platform. What does Disney need to get right with its subscription streaming service? Shashank Venkat explores
After surprising everyone with the announcement of a new OTT platform to compete with the likes of Netflix
last year, Disney has chosen its quarterly earnings report to reiterate the promise of its new streaming service. Disney CEO Bob Iger brushed aside a disappointing earnings report
, and promised investors that the company’s subscription streaming platform
will be ready to launch by the end of 2019.
For its OTT streaming app, dubbed ‘Disneyflix’ by analysts, the company will be able to leverage the pull of popular brands under its roof including Disney, Marvel, ESPN and Pixar, among others. In addition, Disney also holds the majority stake in Fox
after shareholders approved the deal recently, giving it access to a further library of rich content. But, Disney has made it clear that it will be more focused on quality rather than quantity, which will anyway be difficult considering Netflix’s massive catalogue.
Furthermore, Disney has stated that its subscription pricing will be in line with the smaller amount of content available, hinting that it may be a cheaper alternative to Netflix. Netflix’s basic plan costs $7.99 per month in the US.
It is also noteworthy that the Fox deal will give Disney a 60% stake in Hulu, which along with Netflix and Amazon Prime Video, is one of the biggest players in the subscription streaming space already. Disney launched the ESPN+ streaming service
earlier this year, and Iger has made it clear that Disney will not be going in for a giant, aggregated play
; instead it will go for a Disney play, a separate sports play, and of course Hulu.
Should Netflix be worried?
In an earlier blog
, we listed the factors for and against Netflix, as it prepares for Disney’s looming threat. Disney has already started to pull the plug on its franchise films on Netflix (and possibly elsewhere), and the next big Disney/Marvel movie - Captain Marvel - which will release in March 2019 will be streamed on Disney’s new OTT platform and not Netflix. Furthermore, Disney has an entire list of promising titles that are due for release next year, all of which will feed into the blockbuster launch of its streaming platform.
Marvel fans have reacted sharply
on social media to the franchise leaving Netflix. While some are willing to pay for the Disney/Marvel/Pixar/Fox combination, others have cited ‘subscription fatigue
’ pointing out the number of different subscriptions fighting for a share of their dollars. Worryingly for Netflix, some have even said that they might consider cancelling their Netflix subscriptions in favour of Disney’s service.
However, Disney’s streaming platform is at least one year away from the launch, giving Netflix ample time to think of alternative strategies to counter its newest rival. Undoubtedly, Netflix will have to keep investing in content if it wants viewers to keep spending their hard-earned dollars with them. Netflix might also want to have more strategic partnerships
in order to maintain the quality and quantity of content.
What will Disney need to take care of?
While Disney’s new platform looks promising considering the brands and content at its disposal, it will have to take care of the following factors to carve out a niche in this increasingly crowded market:
It is easier to focus on one thing and do it right. Netflix just has to worry about its streaming service. Disney, on the other hand, has to look after its traditional media business and other business verticals, in addition to its subscription streaming service, to keep Wall Street happy. Moreover, a separate Hulu service might cannibalise its own subscribers. Can a diversified conglomerate like Disney focus on getting the digital play right?
Subscription Fatigue -
Subscription fatigue has become a huge problem of late, and as pointed out above, can potentially affect subscriptions to its new streaming service. Pricing might not be a big enough factor in this case, but can Disney convince subscribers to allocate their entertainment budget towards its service?
Competition from other giants -
In addition to existing competition from Netflix and Amazon Prime, Disney will have to contend with giants like Apple, Google and Walmart
. Apple is planning its own subscription bundle
which will feature music, tv and news. Google is also experimenting with YouTube subscriptions. How can Disney stand out among these towering giants with deep pockets?
Subscription billing -
One big reason for the success of Netflix and Amazon Prime is the super smooth subscription billing
experience. It is so seamless that subscribers do not even realise its presence. Yet, it is one of the most important aspects of building a good streaming service. Disney will need to invest in a good subscription billing platform to grow its business.
We have always maintained that Netflix is as much a technology company as it is a media company. Last year, Netflix introduced in-flight streaming technology
and other new app features, and the company is known for bringing in technological changes to improve the viewer experience. Unfortunately, Disney does not have an enviable track record in technology
having tasted failures with previous acquisitions like Infoseek, MovieBeam and Playdom. However, by gaining experience through ESPN+ and Hulu, maybe Disney will be in a much better position to build its new streaming service.
Can ‘Disneyflix’ be a worthy competitor to Netflix? 2019 will answer!