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 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 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 Warsuniverse 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< focusing on the adventures 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 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 Greeson, 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," Greeson 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 Greeson.
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 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 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."
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."
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 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 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.
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."